Can a Li-Ion cell failing in a battery pack damage the other cells?
Reliability of the LiPo 16850 standard cell has significantly improved.


Perfectly matched cells for voltage and ESR can be shunted in parallel in large quantities made into modules, which are then added in series to create the require power source voltage are done with suitable protection for insurance
The risk of internal short circuits although low can cause fires. 
Even fuses can fail, but rare.




In an electrical fire,  water reacts with the lithium and can actually make things worse.  Below, a 2014 Model left alone during charge operation reported Jan 2016 in Norway.

The most reliable method now uses microfuses on both Anode and Cathode for such infrequent failure avoidance.







simulate this circuit &ndash; Schematic created using CircuitLab

Arrays require precision matching of Wh capacity to 0.0x% tolerance when new.


  This schematic would be a 3 dimensional array, so that an open or short is isolated and the pack still survives. This is analogous to the reliability of "the Web" with distributed connections.
  .
  These parallel connections are usually done with Ultrasonic welds on SS with low ESR fuse material and PTC characteristics to accelerate fusing above a high holding temp. But normally for abrupt protection only. 



A DIY approach might be a short whisker wire with an ampacity fuse rating and DCR &lt; cell ESR with some loss in surge peak current carefully chosen to meet both criteria of fusing and Motor start current. But soldering is a problem for SS, so ultrasonic welds are done, just like gold whisker wire inside LEDs to Anode.