From the beginning of the 1990s, we have been vigorously investigating a high-performance power source system for application to environmental vehicles, focusing our research and development efforts specifically on lithium-ion batteries. In order to adapt a battery system to the requirements of the target vehicle, battery performance must be predicted and designed more accurately. In the case of hybrid electric vehicles, for example, battery power must be reliably assured. Improving battery power requires quantitative analytical methods as fundamental techniques for understanding the basic processes that take place in a battery. From this perspective, we began constructing a battery simulation model from scratch in the middle of the 1990s concurrently with our battery R&D activities. The model simulates electrode reactions and charge transport and has been used in investigating the influence of these factors on battery performance.This same approach is thought to be effective for constructing a high-performance lithium-ion battery system for electric vehicles (EVs). This paper presents a study concerning the optimization of battery performance for EV application by analyzing the reactions and lithium-ion transport process taking place inside the battery. The battery system was also investigated with respect to thermal considerations.