Tesla announced a recall of 10,500 Powerwall 2 home battery units sold in the United States between November 2020 and December 2022. The recall follows 22 reports of overheating, smoke, and fire incidents linked to a defect in certain lithium‑ion cells supplied by a third‑party manufacturer.
The company is remotely discharging affected units to mitigate overheating risk and will replace or secure each unit at no cost. No injuries have been reported, though minor property damage has occurred. The recall is the second for Powerwall 2, following a similar Australian recall earlier in 2025 that involved units sold between November 2020 and June 2022.
While 10,500 units represent a small fraction of Tesla’s overall energy storage deployments—Tesla’s Powerwall business accounted for roughly 25% of the company’s $28.1 billion revenue in Q3 2025—the incident highlights supply‑chain risks. The defect stems from a specific batch of cells, underscoring the company’s reliance on external suppliers for critical components.
Tesla’s energy storage segment has been a key growth driver, with Q3 2025 deployments reaching 12.5 GWh and revenue of $3.04 billion, up 176% YoY. Gross margins for the segment hovered around 30%, higher than the automotive division. The recall could temporarily dampen customer confidence and slow new deployments, but the impact on overall revenue is expected to be modest.
Management has emphasized that the recall is a safety measure and that the company’s broader energy strategy remains on track. CEO Elon Musk has previously described the energy business as “doing extremely well” and a future growth engine. The recall, while a setback, is unlikely to derail the company’s long‑term energy ambitions.
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