This paper presents a systematic methodology based on structural analysis and sequential residual generators to design a Fault Detection and Isolation (FDI) scheme for nonlinear battery systems. The faults to be diagnosed are highlighted using a detailed hazard analysis conducted for battery systems. The developed methodology includes four steps: candidate residual generators generation, residual generators selection, diagnostic test construction and fault isolation. State transformation is employed to make the residuals realizable. The simulation results show that the proposed FDI scheme successfully detects and isolates the faults injected in the battery cell with cooling system at different times. In addition, there are no false or missed detections of the faults.Copyright © 2014 by ASME