Starting from Maxwell’s equations, we derive a sensor model for three-axis magnetometerssuitable for localization and tracking applications. The model dependson the relative position between the sensor and the target, orientation of the targetand its magnetic signature. Both point targets and extended target modelsare provided. The models are validated on data taken from various road vehicles.The suitability of magnetometers for tracking is analyzed in terms of local observabilityand Cramér Rao lower bound as a function of the sensor positions in atwo sensor scenario. Also the signal to noise ratio is computed to determine theeffective range of the magnetometer. Results from field test data indicate excellenttracking of position and velocity of the target, as well as identification of themagnetic target model suitable for target classification.