Tesla issues urgent recall of Powerwall 2 units in Australia after overheating reports

Tesla has issued an urgent recall campaign for a subset of its Powerwall 2 home battery units in Australia after regulators and the company received reports that some rechargeable lithium-ion battery packs overheated, smoked or emitted flames, causing minor property damage.

The Australian Competition and Consumer Commission said Tesla had received multiple reports of Powerwall 2 units failing and overheating. "Tesla has received reports of Powerwall 2 units with the affected battery cells smoking or emitting flames, resulting in minor property damage," the ACCC said in a Tuesday statement, adding that the fault could, in a worst-case scenario, lead to a fire that may cause serious injury, death or damage to property.

Tesla said most affected units have already been remotely discharged to reduce the risk of overheating, and that it will remotely deactivate affected Powerwall 2 systems that remain online until replacement cells can be installed. Homeowners will be notified through the Tesla app if their Powerwall is part of the recall, the company said.

The Powerwall 2 contains approximately 14 kilowatt-hours of lithium-ion storage and is commonly paired with household solar arrays to store excess daytime generation. Tesla said the problematic cells were supplied by a third-party vendor and that the fault is confined to a select group of Powerwall 2 users; the company said the newer Powerwall 3 model is not affected.

So far, no injuries have been reported. Tesla said affected batteries will be replaced at no cost to customers and that compensation for lost energy savings would be considered on a case-by-case basis. The company said it is prioritising those customers and will coordinate removal and replacement directly with homeowners and installers. Tesla manufactures Powerwall units at a Nevada facility.

The ACCC said the immediate remote-discharge actions have reduced the risk of further overheating, but warned of the serious hazards posed by thermal runaway events in lithium-ion cells. The regulator did not say how many units were impacted and Tesla has not yet issued a recall notice outside Australia.

Industry analysts said home energy storage systems have grown rapidly in recent years as households adopt rooftop solar and seek to shift consumption. Tesla has been a prominent player in that market, promoting battery solutions alongside its electric vehicles. In 2023, Tesla chief executive Elon Musk highlighted the theoretical scale of solar energy’s potential, saying effectively harnessed solar could power a civilisation far larger than current populations.

Owners of Powerwall 2 systems in Australia should monitor communications from Tesla and follow any instructions provided through the app. The ACCC and Tesla did not provide a timeline for completing replacements for all affected units, or for a broader international recall.

Regulatory authorities and industry groups continue to examine lithium-ion battery safety as the deployment of large residential and commercial energy storage systems expands. Tesla’s response — remote discharges, targeted deactivations and free replacements — is intended to mitigate immediate risk while components are retrieved and swapped from the impacted batches.