Purpose - This paper presents a novel multiobjective optimal design of three phase induction motor using simulated annealing (SA) technique for minimizing annual material cost and annual loss cost as two objectives. Design/methodology/approach - The design problem of a three-phase induction motor is presented as a nonlinear multicriterion optimization problem on the basis of minimizing the annual cost of the motor. The annual cost referred is the sum of the annual interest and depreciation of motor active material costs, annual cost of active power loss of the motor and the annual energy cost required to supply such power loss. A computer package is built which generates initial values of motor parameters and gives the optimal values of these parameters with more than one objective function and nonviolated constraints. The problem is solved by giving weights which reflect the priority of objective functions. The SA technique is used as a tool to solve the problem. Findings - To verify the validity, the proposed method is applied to a three-phase induction motor design. From the results, it is found that the proposed method is fast and efficient and hence it is useful for multiobjective design of an induction motor. Originality/value - This method is particularly useful in satisfying the needs of motor producer and consumer by prioritizing their needs and finally arriving at a best compromise solution.