Maximum Capacity is at 98% in less than 2 months on iPhone 16 Pro

Iphone 16 Pro Max, Battery health 100%, 28 cycles.

Always charging up to 90% and don’t let it drop less than 20%

Its been more than two month of usage.

This is not an answer to your original question.  I have noticed your use of your phone has an unusual Activity being used in one particular App.  The ‘’Home and Locked screen” App;  Has an extraordinary amount of use.

I use my IPhone 16 PMax for a few hour a day.  And my Locked Screen use is a few minutes.  Maybe an average of 4-5% per day.  Yours is over 2 hours use when the phone is locked.   I am not an expert.  But, you might have some settings that might be helpful to reduce this particular issue,  And possibly the amount of “Dynamic Island" features, Live Activities that are active when your phone is locked.

I have an iPhone 16 Pro Max and have been using it since release day. I have the Always on Display enabled and I try to keep it between 95% and 15% as much as possible, but sometimes I let it charge the whole way up overnight and once I accidentally let it completely die while working. I’m actually surprised it’s held up this well so long. Its 100% capacity has lasted longer than any prior iPhone from my personal experience. There definitely seems to be some luck of the draw involved, though.

After doing some additional research, my opinion is that this is not normal for an iPhone 15 battery, which Apple claims will go up to 1,000 cycles before it reaches a Maximum Capacity of 80%.

"Batteries of iPhone 15 models are designed to retain 80 percent of their original capacity at 1000 complete charge cycles under ideal conditions.*"

iPhone battery and performance - Apple Support

That would translate to a 1% decline for every 50 charge cycles. We've been making the mistake of assuming that the old guidelines........a 1% decline for every 25 charge cycles.....applies to the iPhone 15 (and iPhone 16).

The wild card here is that Apple also states......(in the hard to find footnotes).....That these numbers are based on "ideal" conditions, so the easy way to explain that the battery is declining at a rate faster than the claims would be to state that the iPhone must not be operating under "ideal conditions".....whatever they are. I can't find anything that details or defines "ideal conditions".

I have iPhone 16 Pro, Battery health is 100%, 108 cycles.

I personally charge it up to 80% and try not to let it drop below 20%

The issue is lithium ion batteries do not decline in a pure linear fashion. It’s entirely possible it’ll decline just 1% in the next 100 cycles.

Apple will run diagnostics and if nothing is showing as defective, I doubt they’ll do anything. The 4% decline is unusual, but I don’t believe is indicative of a defect. But in any event, diagnostics is the next step.

Lithium ion doesn’t age in a linear fashion, it may hold at 90% for 6 months. This is well documented use issue with lithium ion batteries. Below are 4 different charge voltages and look how the batteries aged. Only 1 out of three aged linearly and this was under laboratory conditions so in real world would be hard to duplicate.

Remember that Apple always rounds down any "tenths" in the Maximum Capacity display to the nearest whole number.

For example.....98.9% will display as 98%, even though the battery is only one tenth below 99%.

So the battery display may have dropped from 100% to 98.9%, a drop of only 1.1%, but this will look as if the battery dropped 2% from 100% to 98%. Significant difference there.

It's just way too early at this point to try to estimate how long your battery might go.

At a cycle count of 200, chances are the battery will be at about 92%. At 375 cycles, the battery will in the 85% range.

If the battery is really defective, and drops below 80% in the first year, Apple will replace the battery at no charge.

Battery life, how long an iPhone lasts on a single charge and is what I see mostly being complained about here, is a different issue from battery health. As has been said already, the iPhone 16 is far too new to have any data on how fast the battery will degrade, though I don't expect it to be significantly different from previous models of iPhone.

As to how long your battery lasts on a charge, there are some tips here:

If the battery in your iPhone drains too quickly - Apple Support

Regards.

You can expect a decrease in battery health of 1-2 percent each month through normal use. On average, 1 percent for every 25 cycles. That puts you at 98 percent. Totally normal.

Recalibration of your battery will only happen when the phone is allowed to charge to 100%. Even when using the 80% limit, the phone will automatically charge to 100% to perform this calibration and if you manually prevent that from happening, then the battery will not calibrate and remain at it's previous Maximum Capacity.

Once you allow the phone to charge to 100% through several cycle as it will automatically do when using the 80% limit, then you will see a larger than expected drop to reflect that actual state of your battery. The number you see for Maximum Capacity is just what was determined when it gets calibrated, it does not mean you instantly see a drop in performance when it shows 98% after it has been calibrated. It could remain at 100% forever without any calibration occurring and that does not mean you are going to have the same performance as if it was brand new. Eventually you will see a message that the Maximum Capacity cannot be determined because the battery has not been calibrated.

Batteries, like people are individuals. No two people age exactly the same and batteries don’t age the same either. The exact usage, chemical makeup, storage conditions, exposure to heat and cold and about a dozen other factors mean that every battery ages differently. Battery aging is not a linear (straight line) and degrades at different rates as the chemicals in the battery age and other factors mentioned above. Apple expects your battery health to be at 80% after 24 months. If your battery health misses that expectation, contact Apple Support.

Please review the Apple Support articles on battery optimization. It contains the best current practices for battery charging.

iPhone Battery and Performance - Apple Support

Batteries - Maximizing Performance - Apple

About the battery and performance of iPhone 11 and later - Apple Support