Eddy current brake works according to Faraday's law of electromagnetic induction. According to this law, whenever a conductor cuts magnetic lines of forces, an emf is induced in the conductor, the magnitude of which is proportional to the strength of magnetic field and the speed of the conductor. If the conductor is a disc, there will be circulatory currents i.e. eddy currents in the disc. According to Lenz's law, the direction of the current is in such a way as to oppose the cause, i.e. movement of the disc.
Essentially the eddy current brake consists of two parts, a stationary magnetic field system and a solid rotating part, which include a metal disc. During braking, the metal disc is exposed to a magnetic field from an electromagnet, generating eddy currents in the disc. The magnetic interaction between the applied field and the eddy currents slow down the rotating disc. Thus the wheels of the vehicle also slow down since the wheels are directly coupled to the disc of the eddy current brake, thus producing smooth stopping motion.