Battery algorithms play a vital role in hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), extended-range electric vehicles (EREVs), and electric vehicles (EVs). The energy management of hybrid and electric propulsion systems needs to rely on accurate information on the state of the battery in order to determine the optimal electric drive without abusing the battery. In this study, a cell-level hardware-in-the-loop (HIL) system is used to verify and develop state of charge (SOC) and power capability predictions of embedded battery algorithms for various vehicle applications. Two different batteries were selected as representative examples to illustrate the battery algorithm verification and development procedure. One is a lithium-ion battery with a conventional metal oxide cathode, which is a power battery for HEV applications. The other is a lithium-ion battery with an iron phosphate (LiFePO4) cathode, which is an energy battery for applications in PHEVs, EREVs, and EVs. The battery cell HIL testing provided valuable data and critical guidance to evaluate the accuracy of the developed battery algorithms, to accelerate battery algorithm future development and improvement, and to reduce hybrid/electric vehicle system development time and costs.