Just to clarify, it's the capacity that decreases after the first cycle; the coloumbic efficiency of the first cycle is always 1 since that value is a ratio comparing with the first cycle. The largest contribution to this first cycle loss is the formation of the SEI at the anode/electrolyte interface. Later losses are also partly attributed to further SEI (re-)formation, but a plethora of other variables will also contribute to progressive loss of capacity after each cycle.