I suspect that a trained chemist could explain why lithium batteries can spontaneously combust like that. IIRC lithium batteries catching fire even caused a plane crash once (can’t recall the details).
Sept. 3 2010 UPS air flight 6 in Dubai-Cologne , poorly wrapped lithium batteries ignited in flight.
So, lithium is a naturally very reactive metal. If you put a small piece of lithium in a bowl of water, like we did in high school, it will skitter around on the surface, as it ignites upon contact with the water.
In a battery, the lithium is combined with phosphorous and stuff, and sandwiched between extremely thin metal (aluminum?) plates, much like the plates in your old school lead acid battery. But instead of being like a stacked PB&J sandwich, it’s more like baklava. Lots of very thin plates, and very thin layers.
So, in an impact or puncture situation, it’s very easy for these layers to be pushed, squished, punched into contact with each other. What you then get is a short circuit. The battery heats up and ignites. Imagine putting steel wool across the terminals of a 9v battery, except with a whole lot more power.
Suddenly, what you now have is a very hot metal fire, featuring lithium, aluminum, phosphorous, all the good stuff, all in one very nice package.
Yay!
Bad stuff, that.
And yet I play with lithium batteries for hobby purposes (model airplanes, etc). They’re fun and safe, but you have to be very careful with them, because they will burn your (house/car/etc) down.