Use of lithium‐ion batteries in mobile applications requires understanding of their response in the case of an impact and mechanical damage. Several studies have investigated the properties of pouch and cylindrical cells. However, the mechanical response of the third common form factor of batteries, namely prismatic cells, has not been fully studied. In this paper, extensive experiments were used to investigate the material properties of small commercial prismatic cells with round corners, in transverse and axial directions. Also, the effects of liquid electrolyte on deformation and failure patterns of cells were studied. Results showed that in quasi‐static tests, the wet and dry cells exhibited similar response in terms of load displacement curves. However, the wet cells showed lower failure points and different fracture patterns. Additionally, the type of separator used in the cells affected the peak load. An analytical approach was proposed to extract material properties from full cell crush testing. Then, finite element models were developed and calibrated using the extracted parameters. The models successfully predicted the load‐displacement response of the cells and the onset of short circuit. Additionally, it was shown that consideration of anisotropic material response has a significant effect on proper prediction of axial loading behavior.