This paper proposes a novel Bi-Magnet machine design concept in which ferrite and rare earth magnet materials are both utilized for torque production. The proposed design aims to reduce the cost of permanent magnet machines by minimizing the use of expensive high-grade rare earth magnet materials without compromising the high performance associated with them. The decreased performance due to the reduced rare earth magnet content can be compensated by adding inexpensive ferrite magnets. The design was optimized to achieve maximum cost-savings by minimizing the rare earth magnet content and improving the saliency of the rotor structure. A comparative study was conducted to highlight the advantages of the proposed concept using the Camry 2007 model as the baseline design. The results show that the proposed design is capable of achieving the same torque and power density as the baseline design using 30% less rare earth magnet materials, resulting in 20% active material cost reduction. The Bi-Magnet machine concept is shown to maintain the superior performance of conventional rare earth permanent magnet machines at a lower cost.