Using ac impedance, we studied the formation process of solid electrolyte interface (SED film on graphite electrode during initial cycles. Results show that the SEI formation takes place through two major stages. The first stage takes place at voltages above 0.25 V (before lithiation of graphite), during which a loose and highly resistive film is formed. The second stage occurs at a narrow voltage range of 0.25-0.04 V, which proceeds simultaneously with lithiation of graphite electrode, In the second stage, a stable, compact, and highly conductive SEI film is produced.