Tesla recalls 10,500 Powerwall 2 battery systems due to overheating, fire risk

Tesla has announced a significant recall affecting approximately 10,500 Powerwall 2 units, following a disclosure from the U.S. Consumer Product Safety Commission (CPSC) released on Thursday. The recall stems from concerns that the lithium-ion battery cells in specific Powerwall 2 systems may malfunction during regular usage, leading to overheating, and in some instances, producing smoke or flames. Such malfunctions pose serious fire and burn risks that could potentially result in severe injuries or fatalities. The electric vehicle and clean energy giant attributed the issue to a defect in third-party battery cells but did not disclose the identity of the supplier involved. According to the CPSC, Tesla had previously received 22 reports from customers regarding overheating incidents, which included five cases of fires causing minor property damage; fortunately, there were no reported injuries. Tesla's Powerwall products are part of its Energy division, which also offers larger backup batteries designed for utility-scale projects and major business facilities. These Powerwalls can store electricity generated from Tesla's solar installations, allowing homeowners to utilize stored energy during power outages or peak electricity pricing periods. In a separate statement on its website, Tesla clarified that this recall does not impact owners of the newer Powerwall 3 models. The company has committed to replacing all affected units at no cost to the customers. Tesla's Energy division has proven to be a significant growth area, with a 44% revenue increase to $3.42 billion in the third quarter of 2025, accounting for about one-quarter of Tesla's overall revenue. Following the recall announcement, Tesla's stock experienced a decline of over 7%. Representatives from the company have yet to respond to inquiries regarding the recall.