A model based SOC estimation scheme using parameter identification is described and applied to a Lithium-ion battery module that can be installed in electric vehicles. Simulation studies are performed to verify the effect of sensor faults on the SOC estimation results for terminal voltage sensor and load current sensor. The sensor faults should be detected and isolated as soon as possible because the SOC estimation error due to any sensor fault seriously affects the overall performance of the BMS. A new fault detection and isolation(FDI) scheme by which the fault of terminal voltage sensor and load current sensor can be detected and isolated is proposed to improve the reliability of the BMS. The proposed FDI scheme utilizes the parameter estimation of an input-output model and two fuzzy predictors for residual generation; one for terminal voltage and the other for load current. Recently developed dual polarization(DP) model is taken to develope and evaluate the performance of the proposed FDI scheme. Simulation results show the practical feasibility of the proposed FDI scheme.