High efficiency motors play a key role in energy conservation around the world. Understanding the efficiency requirements of IEC and NEMA is crucial in both producing and purchasing the right type of electric motors to meet various efficiency requirements. In addition to the efficiency values, understanding the tolerances that are associated with these efficiencies is important as well. As shown in IEC, NEMA efficiency tables, for every horsepower rating there is a nominal efficiency value, and a tolerance associated with it. The main factors that influence the efficiency value and its tolerance are motor designing, manufacturing, testing and operations. To help readers understand motor efficiency and motor efficiency tolerances, first, this paper will examine the IEC, NEMA requirements and the differences between them. Secondly the paper will analyze the factors that affect the final efficiency value and its tolerance. Lastly, the paper will examine production data to illustrate what influences the efficiency bands and what efficiency tolerance is achievable on the production lines.