Capacity fade of Sony US 18650 Li-ion batteries cycled using different discharge rates was studied at ambient temperature. The capacity losses were estimated after 300 cycles at 2C and 3C discharge rates and were found to be 13.2 and 16.9% of the initial capacity, respectively. At I C discharge rate the capacity lost was only 9.5%. The cell cycled at high discharge rate (K) showed the largest internal resistance increase of 27.7% relative to the resistance of the fresh cells. The rate capability losses were proportional with the increase of discharge rates. Half-cell study and material and charge balances were used to quantify the capacity fade due to the losses of primary active material (Li+), the secondary active material (LiCoO2/C) and rate capability losses. It was found that carbon with 10.6% capacity loss after 300 cycles dominates the capacity fade of the whole cell at high discharge rates (K). A mechanism is proposed which explains the capacity fade at high discharge rates. (C) 2003 Elsevier Science B.V. All rights reserved.