Degradation due to capacity fade is a major cause of concern involved in the design and implementation of lithium-ion battery. In particular, the formation and growth of Solid Electrolyte Interface (SEI) have been considered as one of the primary degradation mechanisms affecting the cycle life of the battery. Over the past decade, several models have been reported towards simulation of SEI growth-induced degradation and prediction of cycle life. In this work, an efficient reduced-order electrochemical model was developed for a lithium cobalt oxide/graphite battery. A reaction–diffusion based SEI model was integrated with the electrochemical model to predict the cyclic capacity loss due to electrolyte deposition on the anode. The algorithm developed for this battery module was designed to reduce the computational time for capacity fade calculation with any (dis)charging protocol. The model was also applied for a lithium ferrous phosphate/graphite cell and in both cases, the fade predictions were within ±1% deviation from the experimental results. A comparison of two charging protocols was undertaken to identify approaches that improve capacity fade characteristics of battery. The electrochemical benefit of a reduced fading rate for aged (or used) lithium battery was investigated. A concept of “aged-battery” was proposed to be used as an advantage for better cycle-life in battery for biomedical devices and recycling of electric vehicle battery for solar panels applications. An economic analysis was performed to justify the benefits from lower fade that was weighed against the additional cost involved in aging the battery.