An advanced model is proposed, describing the capacity losses of C6/LiFePO4 batteries under storage and cycling conditions. These capacity losses are attributed to the growth of a Solid Electrolyte Interface (SEI) at the surface of graphite particles in the negative electrode. The model assumes the existence of an inner and outer SEI layer. The rate determining step is considered to be electron tunneling through the inner SEI layer. The inner SEI layer grows much slower than the outer SEI layer. Another contribution to the degradation process is the exfoliation of SEI near the edges of graphite particles during discharging and the formation of new SEI induced by the volumetric changes during the subsequent charging. The model has been validated by storage and cycling experiments. The simulation results show that the capacity losses are dependent on the State-of-Charge (SoC), the storage time, cycle number and graphite particle size. The model can be used to predict both the calendar and cycling life of the Li-ion batteries.