Tesla has initiated a major recall of its Powerwall 2 energy storage units in Australia following reports that several homes experienced smoke or flames originating from the batteries. The product safety move comes after findings by the Australian Competition and Consumer Commission (ACCC).
What went wrong
The problem lies in certain lithium-ion battery cells supplied by a third-party manufacturer to Tesla. These cells, used in a subset of Powerwall 2 units, have been shown to overheat in some cases, emit smoke or even flames, leading to minor damage to property. The recall covers units manufactured in the U.S. and sold in Australia between November 2020 and June 2022.
So far, Tesla reports no injuries. But given that overheating batteries can escalate quickly, the ACCC flags serious risk, including potential fire, property damage, and even injury if the issue is not addressed.
What Tesla is doing
Tesla is taking several steps to limit further risk and manage the fallout:
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Owners will get notifications through the Tesla app telling them if their unit is affected.
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Affected Powerwall 2 systems that remain online are being remotely discharged to lower their risk of overheating.
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All impacted units will be replaced free of charge. Tesla will work with certified installers to schedule removals and installations of new units.
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Compensation for lost energy savings (if households were using their systems during the discharge period) will be considered individually.
An ACCC spokesperson told pv magazine Australia, “Once your Powerwall 2 unit has been discharged and isolated from service, the unit does not pose any operational risk.”
Energy storage systems like Powerwall are increasingly common in homes that rely on them for backup power, storing solar generation, or participating in virtual power plants (VPPs). A failure in a system many use daily isn’t just a technical glitch; it has safety, financial, and regulatory implications. If battery systems are unsafe, consumer trust suffers, insurance costs may rise, and regulators could tighten approval regimes for home energy hardware.
Tesla’s move to replace units and potentially compensate customers is a step toward preserving that trust. But the recall underscores how even established energy brands can still face serious supply-chain and quality control challenges, especially with battery components, which are complex and sensitive.
If you own a Powerwall 2 and bought it between November 2020 and June 2022, check your Tesla app. If you receive a recall notice, your unit might be affected. The good news is Tesla is shouldering the cost of replacement, while also remotely discharging units to reduce risk. For now, no one has been hurt, but this recall is a reminder that as we move toward more distributed, home-level energy storage, safety oversight absolutely can’t lag behind innovation.
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