With good energy storage characteristics, lithium-ion battery electrodes become promising nano-energy storage systems for renewable energy vehicles. However, during the charging and discharging of an electrode system, deformation and degradation may occur, causing battery and material failure that seriously affect the cycling performance and service life of a battery. This is a challenge for the application of lithium batteries in the electric vehicle field. This paper describes the nano-energy system models of different electrode structures and the failure characterization mechanisms during the process of charging and discharging. Moreover, it reviews the new development in the cycling performance evolution and experiment theory, and it analyzes the new research results of Si–C electrode failure. Additionally, this paper addresses the low utilization rate, poor cycling performance and low energy capacity problems associated with lithium batteries. Furthermore, it discusses the highlights, challenges and future direction of lithium batteries and the optimal design technologies that are providing support for the research of lithium battery technologies and development in the energy storage industry. It also reveals the energy system model, nanoscale defects of evolution rules and performance degradation mechanisms according to the failure characterization of nano-structures. Finally, it evaluates the operating mechanism, failure process and engineering application of silicon–carbon–lithium electrode systems.