X-ray photoemission spectroscopic and high-resolution hard X-ray photoemission spectroscopic studies of positive electrodes in LiNi0.73Co0.17Al0.10O2 and hard carbon based batteries were carried out to elucidate the mechanism of battery degradation. Li2CO3, hydrocarbons, ROCO2Li, polycarbonate-type compounds and LiF were observed on positive electrode surfaces and the amount of carbonates was found to have increased after cycle testing. Above 60°C, signs of electrolyte decomposition were indicated. Near the surface of the positive electrodes, a Li-deficient cubic phase is present and grows with degradation. Capacity and power fade could be related to the amount of species on the surface and the thickness of the Li-deficient cubic phase near the surface.