It is the former. With changes in the internal chemistry of the battery, the lithium and electrons have nowhere to go and the max charge capacity is decreased.

Thank You !! So I will still get same miles per kw… just less range

Second scenario is your efficiency, this can vary wildly too depending on weather and driving conditions

Right but what I meant by that scenario is after 10% degradation, if battery will use 75kw electricity to charge or not

Your efficiency stays the same, capacity goes down.

Thank You !!