To meet increasing demand for higher reliability in power electronics converters applicable in electric vehicles, fault detection (FD) is an important part of the control algorithm. In this study, a model-based open transistor fault diagnsosis method is presented for a voltage-source inverter (VSI) supplying a five-phase permanent magnet motor drive. To realise this goal, a model-based observer is designed to estimate model parameters. After that, the estimated parameters are used to design a sliding mode observer in order to estimate the phase current in an ideal model. Subsequently, the proposed FD technique measures the similarity between the estimated current and real current using cross-correlation factor. This factor is used for the first time in this study to define a FD index in VSI. The presented FD scheme is simple and fast; also, it is able to detect multiple open switch or open phase faults in contrast to conventional methods. On the other side, in order to track reference current of the motor, the estimated parameters are used to design a proportional resonant controller. The FD technique is used to operate a multiphase fault-tolerant brushless direct current (BLDC) motor drive. Experimental results on a five-phase BLDC motor with in-wheel outer rotor applicable in electrical vehicles are conducted to validate the theory.