The degradation mechanism of lithium manganese oxide spinel/graphite Li-ion cells using LiPF6-based electrolyte was investigated by a Mn-dissolution approach during high-temperature storage, and by ac impedance measurement using a reference electrode-equipped cell. Through these studies, we confirmed that Mn ions were dissolved from the spinel cathode in the electrolyte and were subsequently reduced on the lithiated graphite electrode surface, due to the chemical activity of the lithiated graphite, and caused a huge increase in the charge-transfer impedance at the graphite/electrolyte interface, which consequently deteriorated cell performance. To overcome the significant degradation of the spinel/graphite Li-ion cells, we investigated a new electrolyte system using lithium bisoxalatoborate (LiBoB, LiB(C2O4)2) salt not having fluorine species in its chemical structure. Superior cycling performance at elevated temperature was observed with the spinel/graphite cells using LiBoB-based electrolyte, which is attributed to the inert chemical structure of LiBoB that does not generate HF. Mn-ion leaching experiments showed that almost no Mn ions were dissolved from the spinel powder after 55°C storage for 4 weeks. Through optimization of organic solvents for the LiBoB salt, we developed an advanced Li-ion cell chemistry that used lithium manganese oxide spinel, 0.7M LiBoB/EC:PC:DMC (1:1:3), and graphite as the cathode, electrolyte, and anode, respectively. This cell provides excellent power characteristics, good calendar life, and improved thermal safety for hybrid electric vehicle applications.