The most common failure mode is actually dendrites growing off the cathode and puncturing the thin layers of the cylindrical battery. Typically these are cobalt

The most common failure mode is actually dendrites growing off the cathode and puncturing the thin layers of the cylindrical battery. Typically these are cobalt or iron, depending on the chemistry. Note that I'm discussing failure of a cell, not slow degradation in its ability to hold a charge, which has a variety of causes including the one you sketched out.