The State of Health (referred to as SOH or Battery Health) is a term that is used to describe how healthy or strong a battery pack is. Over time a battery pack's capacity and performance can degrade due to cell aging or exposure to extreme temperatures. These degradations can cause reduced capacity or reduced efficiency.
Typically this value is calculated based on observed capacity and nominal capacity (that is, a relationship between how much capacity is actually observed by the BMS and how much capacity the battery pack started off with when new) and the Internal Resistance of the pack.
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