Batteries for stationary and automotive applications are required to provide extended cycle life and calendar life. Lithium-manganese oxides (LiMn2O4) with spinel structure and lithium-nickel-cobalt mixed oxides (LiNiCoO2) with layered structures have been extensively studied in the last few years for usage in high energy and high power batteries in order to replace lithium-cobalt oxide (LiCoO2) as cathode material in terms of cost, abundance and performance. In this paper, we summarize some basic mechanisms responsible for capacity fading under cycling and different storage conditions for both types of cathode materials. Lithium-nickel-cobalt mixed oxides show excellent storage stability in the discharged state and low metal solubility in the electrolyte. The cycling stability is mainly influenced by structural changes in the delithiated state and thermal instability arises from oxygen release at elevated temperatures in the charged state. Small amounts of aluminum and magnesium dopants stabilize the layered structure and increase cycling stability of lithium-nickel-cobalt oxide. Different mechanisms of capacity fading especially at higher temperatures are discussed for lithium-manganese oxide spinels. Capacity fading is highly dependent on cycling and storage conditions and caused by structural changes as well as by side reactions with electrolyte catalyzed by decomposition products of LiPF6 Conducting salt and H2O impurities in the electrolyte. (C) 2003 Elsevier B.V. All rights reserved.