October 2018 - Long-term stability of reference electrode is a major issue in lithium-ion batteries. A composite Ni-Li reference electrode (RE) with a longer lifetime than traditional Cu-wire Li reference electrodes is proposed in this study. However, the larger size of the Ni-Li RE creates a blocking effect when positioned internally in the battery. The blocking effect manifests as an abnormal feature in the measured electrode potential. A two-dimensional (2D) finite element model of the cell with an internal RE is constructed to investigate the mechanism of the blocking effect. The internal RE blocks the path of local current flow in the electrolyte, and decreases the electrochemical reaction rate of particles in the anode and cathode, leading to measurement errors. Characteristic lengths of RE and applied currents were examined as parameters in the finite element model to determine their effect on the magnitude of error. A useful guide is provided for proper selection of size of RE and applied current in dynamic tests of lithium-ion batteries.