The article presents a statistical model of mechanical degradation in the negative electrode of lithium ion batteries. During battery operation, nano-cracks nucleate and grow caused by the impact of diffusion-induced stress during Li-ion intercalation. Particle agglomeration is another mechanical effect that contributes to morphological changes. The presented model employs a population balance formalism to describe the propagation of the particle density distribution function in the electrode. A set of kinetic and transport equations accounts for structure-transforming processes at the level of individual particles. These processes alter the particle density distribution function, and cause changes in battery performance. A parametric study reveals the population of small particles and the width of the initial particle size distribution (PSD) as the main parameters that determine changes in electrochemical performance and capacity fade. The model is applied to experimental data in order to isolate and quantify the impact of various degradation mechanisms.