The State of Health (SOH) of lithium-ion batteries significantly impacts the performance, safety, and reliability of the battery, making it a crucial component of the battery management system. Addressing the issues of inadequate accuracy and lack of robustness in current SOH estimation methods, this study introduces a novel methodology for estimating SOH in lithium-ion batteries. It leverages the multi-population evolution whale optimization algorithm optimized variational mode decomposition (MEWOA-VMD) in conjunction with Transformer architecture. This framework enhances the efficiency and accuracy of SOH estimation by leveraging the computational capabilities of edge devices for real-time data processing, as well as the robust data processing power and model training advantages offered by cloud computing. Specifically, MEWOA is utilized to optimize VMD parameters, enabling MEWOA-VMD to fully decompose the capacity signal of lithium-ion batteries. This results in a component showing a global attenuation trend and a set of fluctuating components that represent capacity regeneration, thereby minimizing the impact of capacity regeneration on SOH estimation. Subsequently, all components are collectively input into the Transformer, marking the first application of this method for input. To enhance convergence speed and training efficiency, the layer normalization (LN) layer within the neural network architecture is proactively advanced. Finally, various artificial neural networks are compared and validated on three publicly available datasets. Furthermore, Gaussian noise is introduced into the original data to validate robustness. To confirm the practical applicability of the proposed method, real-world vehicle data is used for SOH estimation. The results indicate that the proposed method achieves a maximum MSE of no more than 0.009% across three publicly available datasets, showcasing improved accuracy and stability in SOH estimation. The practical applicability is further validated using real-world vehicle data, proving the proposed method’s potential for application in edge cloud-based battery management systems.