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Major decision driving constraints in the automobile sector is space and cost. With the advent of electric vehicles, these constraints apply for electric drive motor also. For applications involving neighborhood electric vehicles (NEV), the challenges become manifold with target cost of complete drivetrain system, including motor, controller & transmission, being very low. This and application of low cost axle mount drive systems prohibits usage of liquid cooled systems. In this scenario, ways to improve thermal performance of motor can be - to reduce heat generation, increase heat conduction and to increase heat rejection so that temperature of winding is kept under thermal limit of insulation used. Major area of thermal hotspots in the motor is at the end windings where direct conductive path to the housing is less. In this paper, thermal performance of the motor is improved by introducing vacuum encapsulation at the end winding thereby increasing net heat conduction.