May 2020 - "Polarization increase reduces capacity" is frequently used to explain capacity fading in rechargeable batteries. To verify this empirical law, failure mode and effect analysis (FMEA) was used to identify capacity fade mechanism and derive the contribution of each failure mode in graphite-LiCoO2 cells cycled between 3.00 V and 4.35 V. The thermodynamic and kinetic attributes to the capacity fade at the material, electrode, and cell levels were quantified respectively. Loss of Li inventory dominates in the capacity fade, followed by the loss of active materials in the electrodes. The capacity loss due to the impedance increase in the cell was relatively insignificant, contrary to what often conceived. This work emphasizes the importance of using quantitative FMEA to assess cell degradation and conduct failure analysis so the contributions from material, electrode, to the cell level can be distinctly identified. The polarization increase does not affect the charge retention significantly.