A method of managing a battery system (10, 100, 200), the battery system (10, 100, 200) including at least one battery cell (14, 102, 215) and one or more sensors (24, 26, 170, 220) configured to measure a temperature of the at least one battery cell (14, 102, 215), the method comprising: receiving, by a computer-based battery management system (12, 180, 202) from the one or more sensors (24, 26, 170, 220), a measurement of the temperature of the at least one battery cell (14, 102, 215), a measurement of the voltage of the at least one battery cell and a temporally corresponding measurement of the current and the temperature of the at least one battery cell (14, 102, 215); estimating, by the battery management system (12, 180, 202), an open circuit potential of the at least one battery cell (14, 102, 215); estimating, by the battery management system (12, 180, 202), a capacity fade of the at least one battery cell (14, 102, 215) based on the open circuit potential of the at least one battery cell (14, 102, 215) and a ratio of a change in the open circuit potential relative to a change in the temperature of the at least one battery cell (14, 102, 215); and regulating, by the battery management system (12, 180, 202), at least one of charging or discharging of the at least one battery cell (14, 102, 215) based on the estimation of the capacity fade, characterized in the step of estimating the open circuit potential of the at least one battery cell (14, 102, 215) includes estimating the open circuit potential to be equal to the voltage of the at least one battery cell (14, 102, 215) when the at least one battery cell (14, 102, 215) is in a quasi-equilibrium state, wherein the quasi-equilibrium state occurs during periods of zero applied current and removal of load from the at least one battery cell (14, 102, 215) when a rate of change of the voltage over time is below a threshold value. receiving, by a computer-based battery management system (12, 180, 202) from the one or more sensors (24, 26, 170, 220), a measurement of the temperature of the at least one battery cell (14, 102, 215), a measurement of the voltage of the at least one battery cell and a temporally corresponding measurement of the current and the temperature of the at least one battery cell (14, 102, 215); estimating, by the battery management system (12, 180, 202), an open circuit potential of the at least one battery cell (14, 102, 215); estimating, by the battery management system (12, 180, 202), a capacity fade of the at least one battery cell (14, 102, 215) based on the open circuit potential of the at least one battery cell (14, 102, 215) and a ratio of a change in the open circuit potential relative to a change in the temperature of the at least one battery cell (14, 102, 215); and regulating, by the battery management system (12, 180, 202), at least one of charging or discharging of the at least one battery cell (14, 102, 215) based on the estimation of the capacity fade, characterized in the step of estimating the open circuit potential of the at least one battery cell (14, 102, 215) includes estimating the open circuit potential to be equal to the voltage of the at least one battery cell (14, 102, 215) when the at least one battery cell (14, 102, 215) is in a quasi-equilibrium state, wherein the quasi-equilibrium state occurs during periods of zero applied current and removal of load from the at least one battery cell (14, 102, 215) when a rate of change of the voltage over time is below a threshold value.