The safety issues of lithium ion batteries pose ongoing challenges as the market for Li-ion technology continues to grow in personal electronics, electric mobility, and stationary energy storage. The severe risks posed by battery thermal runaway necessitate safeguards at every design level – from materials, to cell construction, to module and pack assembly. One promising approach to pack thermal management is the use of phase change composite materials (PCC™), which offer passive protection at low weight and cost while minimizing system complexity. We present experimental nail penetration studies on a Li-ion pack for small electric vehicles, designed with and without PCC, to investigate the effectiveness of PCC thermal management for preventing propagation when a single cell enters thermal runaway. The results show that when parallel cells short-circuit through the penetrated cell, the packs without PCC propagate fully while those equipped with PCC show no propagation. In cases where no external short circuits occur, packs without PCC sometimes propagate, but not consistently. In all test conditions, the use of PCC lowers the maximum temperature experienced by neighboring cells by 60 °C or more. We also elucidate the propagation sequence and aspects of pack failure based on cell temperature, voltage, and post-mortem data.