LiFePo4 battery is widely used in electric vehicles; however, its flatness and hysteresis of the open-circuit voltage curve pose a big challenge to precise state of charge (SOC) estimation. The issue is discussed and addressed in this paper. First, a cell model with hysteresis is built to describe real-time dynamic characteristics of the LiFePo4 battery. Second, the model parameters and SOC are estimated independently to avoid the possibility of cross interference between them. For model identification, an adaptive unscented Kalman filter (AUKF) algorithm is used to identify the cell parameters as they change slowly. While SOC could change rapidly, wavelet transform AUKF algorithm is put forward to estimate SOC. In the novel algorithm, the measurement noise can be estimated and updated online. Finally, the performance of the proposed method is verified under dynamic current condition. The experimental results show that estimated value based on the proposed method is more accurate than unscented Kalman filter-based method and AUKF-based algorithm. Meanwhile, the proposed estimator also has the merits of fast convergence and good robustness against the initialization uncertainty.