Lithium-ion battery is the core of new plug-in hybrid-electrical vehicles (PHEV) as well as considered in many 2nd generation hybrid electric vehicles (HEV). In most cases the lithium-ion battery performance plays an important role for the energy management of these vehicles as high-rate transient power source cycling around a relatively fixed state of charge (SOC). In this paper an averaged electrochemical Lithium-ion battery model suitable for estimation is presented. The model is based on an averaged approximated relationship between (i) the Butler-Volmer current and the solid concentration at the interface with the electrolyte and (ii) the battery current and voltage. A 4th order model based extended Kalman filter (EKF) is then designed and the estimation results are tested in simulation with the non-averaged model.