We have developed a unique induction motor that has free rotating magnets inside its rotor. In experimental results for a prototype motor, we have obtained superior performance over existing motors in terms of the power factor, efficiency, and output torque. The experimental details are as follows. The power factor of the test motor is significantly improved in comparison with that of a conventional induction motor. The power factor can be held to be unity, leading or lagging by changing the line frequency and/or source voltage. This is a quite unique feature, because the power factor of the usual induction motors always lags. The improvement of the power factor is effective not only in decreasing current loss, but also in decreasing voltage drop in the line and increasing installation capacity. The efficiency of the motor is remarkably higher than that of similar-sized conventional induction motors over a wide output power range. Actually, in ordinary induction motors, the efficiency is reduced as the power and/or the source voltage are decreased. However, the proposed motor is driven at high efficiency by lower source voltages in lower power ranges. The efficiency is improved by reducing the secondary current and the magnetizing current.