Dynamic reliability analysis of binary systems has been widely studied in case of homogeneous continuous time Markov process assumption in the literature. In this study, we evaluate dynamic performance of a multi-state rotor line of electric motors manufacturing system under non-homogeneous continuous time Markov process (NHCTMP) degradation by using lifetime distributions of seven workstations within the system. By means of this degradation process assumption we capture the effect of age on the state change of components in the analysis by means of time dependent transition rates between states of the workstations. Essentially this is typical of many systems and more practical to use in real life applications. The working principle is based on a three state structure. If all the machines within each workstation work, the workstation is defined as working with the full performance. Whenever at least one machine fails within each workstation, then the workstation is defined as working with partial performance. If all the machines in the workstation fail then the workstation is defined as failed. The lifetime properties of the workstations under NHCTMP assumption have been studied for this three-state structure of the workstations. The workstations are all working independently and nonidentically from each other and they are connected in series within the system.We especially performed an extensive application study based on the lifetime data regarding the seven workstations within a manufacturing system. Dynamic reliability results are also discussed for the system structure. Some performance characteristics are developed for both workstations and the system as well. Numerical results for the performance characteristics of those workstations and the system are provided and supported with some graphical illustrations.