Tesla recalls 10,500 Powerwall 2 battery systems in US following safety incidents

Tesla has issued a recall notice for its fully-integrated Powerwall 2 AC battery energy storage system and initiated a replacement program for roughly 10,500 affected units in the US. 

The US Consumer Product Safety Commission reported that Tesla has received 22 reports of overheating, including six instances of smoking and five cases of fire resulting in minor property damage. No injuries have been reported.

Tesla said that the recall is due to a third-party battery cell defect, without naming the supplier. “The affected subset of Powerwall 2 units may stop functioning normally, resulting in overheating, smoking and in some cases smoke or flame causing minor property damage,” it explained in the announcement.

The company emphasized that the issue is limited to this specific group of Powerwall 2 customers and does not affect Powerwall 3. All affected units are being replaced at no cost to customers.

Nearly all affected units in the US have already been remotely discharged, rendering them safe, Tesla said on Thursday. Any remaining units are being discharged by Tesla technicians.

Tesla also urged homeowners to check the Tesla app for a message confirming whether their Powerwall 2 is affected and noted that once a unit has been discharged, it poses no operational risk. For scheduling replacements, Tesla or Certified Installers will reach out directly by email or phone, it added.

The US recall comes on the heels of a similar nationwide recall in Australia initiated in September 2025. Following reports of Powerwall 2 safety incidents, Tesla said it had identified a safety issue involving a batch of lithium-ion battery cells sourced from a third-party supplier. The company said that Powerwall 2 units with the affected battery cells were smoking or emitting flames resulting in minor property damage, and warned that the systems may fail and overheat.

Tesla’s energy division, which sells Powerwalls and other battery energy storage products, has become the company’s biggest growth engine. In the third quarter of 2025, it contributed nearly a quarter of Tesla’s total profit while accounting for only 13% of revenue. Namely, the energy storage and generation segment reported $3.41 billion in revenue, compared with $2.32 billion in costs, achieving a 31.4% profit margin – nearly double Tesla’s non-energy generation profit margin of 16.1%.

In late October, Tesla announced that its deployed energy storage capacity grew 84% year-over-year, reaching 43.5 GWh over the past 12 months.