Field experience with electric vehicles has shown in a significant number of cases, the performance of the batteries starts to degrade in a few months or a few thousand miles resulting in unhappy vehicle owners. This has occurred even for batteries for which the manufacturer has claimed a cycle life of several hundred deep discharge cycles. In this paper, the reasons are explored for this large difference between the expected and experienced battery cycle life and what life cycle testing should be done to greatly reduce the uncertainty in battery pack life. Test procedures for battery life testing are discussed and it is shown that there is a large difference in the cycle life that would be inferred from test results for one or two modules compared to that from testing a pack of many modules (at least ten). Measurements of the module-to-module variability in terms of the standard deviation of the module voltages showed that the increase of these module imbalances signals the degradation of the performance of the pack and they must be controlled through quality control in the manufacturing process and monitoring of module voltages during charge and discharge in the vehicle. Test data for packs of sealed lead-acid batteries discharged at constant power (10 W/kg) and on the SFUDS cycle indicated the module-to-module variability was much greater on the transient power SFUDS cycle and accordingly, the battery pack cycle life on the SFUDS cycle was much shorter than on the constant power cycle. The effects of load leveling on the initial and life cycle costs of the energy storage system in electric and hybrid vehicles as a function of vehicle acceleration and range characteristics were studied using spreadsheet models that related cycle life, $/kWh, average depth-of-discharge, energy density, battery peak power density, and load leveled battery power density. The load leveling was done using ultracapacitors having an energy density of 10 Wh/kg. The spreadsheet results show that the advantages of load leveling the batteries are largest for hybrid vehicles with relatively short all- electric range (less than 50 km) and for electric vehicles with 0-60 mph acceleration times of 10 seconds or less. The over-riding factor in assessing the operating cost of all the vehicles is battery cycle life and how it is affected by the maximum working power density of the battery and the average daily depth-of-discharge it experiences over its life.