The can shields in airgap characterize a canned electrical machine as a hydraulic pump drive. This paper studies modeling and characterization of the can effect. To analyze electromagnetic field on can shields, followed by can loss, an analytical model is proposed. Such a model is of concentric cylindrical rotor layer structure with the slotting effect and magnetic saturation. This work is performed by comparing an ordinary induction machine with a canned version. Based on differences of airgap flux distribution, iron loss due to the can effect is analyzed. Then, the can loss and harmonics under typical operating condition are analyzed. The can loss calculation determined by magnetic saturation is discussed. Finite element method and measurement are used as reference.