The paper characterizes dynamics and modelling of a Lithium-ion battery. Theoretical formulation and literature review are combined to derive the necessary battery characterization. The three main dynamics for modeling the battery are: direct-current electrical equivalent circuit, state-of-charge (SOC) and thermal dynamic. Furthermore, the capacity fade caused by degradation is considered as a fourth dynamic. Degradation is considered as the sum of calendar aging and cycling loss dynamics. The modeling procedure has general validity and can be used for different battery chemistries by changing specific parameters. The model is tailored for a 40 kWh Lithium Nickel Manganese Cobalt (NMC) Oxide battery, which is currently used in the Nissan LEAF 2018. Considering a user driving 45 km/day and the temperature of the years 2017 and 2018 in Denmark, the battery capacity fade is found to be between 2 and 5% of the battery capacity after two years of use. Degradation is highly dependent on the average level of SOC during the years.