Liquid metal batteries (LMBs) are an attractive choice for grid-scale energy storage. However, LMBs suffer from magnetically induced instabilities in the tri-layered liquid system, which leads to interfacial instabilities and even short circuit. In present research, working processes of a 23 Ah Li||Sb–Sn LMB at various discharge rates (0.2 C, 0.4 C and 0.8 C) are simulated by a 2-D axisymmetric model considering magnetic fluid dynamics and electrochemical reactions. A magnetically induced flow is observed in the model. The flow promotes the mass transfer and optimizes the electrochemical performance of the LMB, while it causes electrolyte deformation and fluid instabilities. A thin electrolyte reduces ohmic losses and optimizes electrochemical performance, but increases the short circuit risk.