A cooling system of an electric machine includes a stator core, a housing, and a thermal interfacial material interposed between complementary mating surfaces of the stator core and the housing for substantially eliminating air gaps therebetween. A method of cooling an electric machine having a housing and a stator includes placing a thermal interfacial material onto a heat transfer interface between the stator and the housing, whereby the thermal interfacial material reduces contact resistance at the heat transfer interface. A method of cooling a stator of an electric machine includes heating a housing having a radially inner surface, coating a radially outer surface of the stator and/or the radially inner surface of the housing with a thermal interfacial material, and inserting the stator into the heated housing, whereby the thermal interfacial material is interposed between the inner surface of the housing and the outer surface of the stator.