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A comparative study is conducted on the thermal behavior of three Li-ion battery modules with two cooled indirectly with air and one cooled indirectly with liquid. All three battery modules are stacked with the same twelve 8Ahr high-power pouch Li-ion battery cells. Heat generated from the cells is dissipated through 1-mm thick aluminum cooling plates sandwiched between two cells in the module. Each of the cooling plates has an extended surface for heat dissipation. The battery heat is dissipated through the cooling fins exposed in air flow channels in the case of air cooling, and through the extended cooling plate surfaces that are in contact with a liquid-cooled cold plate in the case of liquid cooling. The cell temperatures are analyzed using a simplified Finite Element Analysis (FEA) model for battery cooling. Simulation results show that with air cooling channels structured similar to that of compact heat exchangers, the air utilization and effectiveness of air cooling can be improved significantly. With proper design of the air cooling channels (i.e. with fin inserts in the air flow channels), indirect air cooling could reach a cooling condition comparable to that of indirect liquid cooling and obtain a higher gravimetric energy density with the same cooling-related parasitic volume in the battery system as long as the cell heat rejection is < 10 W/cell.