Two major factors:

1) Chemical components and materials in the battery cell start to oxidize since the manufacture date of a battery.  Oxidization lessens and decreases the energy of battery cell as time goes by. 

2) Every charge and discharge cycle reduces the capacity inside battery cells.  As the number of charge and discharge cycles increases, mechanical stress is caused and the battery cells lose more and more capacity and service energy.  Eventually, the battery is aged and failed.