An electrical equivalent circuit model for lithium-ion batteries used for hybrid electric vehicles (HEV) is presented. The model has two RC networks characterizing battery activation and concentration polarization process. The parameters of the model are identified using combined experimental and extended Kalman filter (EKF) recursive methods. The open-circuit voltage and ohmic resistance of the battery are directly measured and calculated from experimental measurements, respectively. The rest of the coupled dynamic parameters, i.e. the RC network parameters, are estimated using the EKF method. Experimental and simulation results are presented to demonstrate the efficacy of the proposed circuit model and parameter identification techniques for simulating battery dynamics.