The incident on Wednesday morning left one man with minor burns and forced 70 people to evacuate the Potts Point property while 22 firefighters extinguished the blaze.
Fire safety experts say explosions from light battery-powered vehicles such as bicycles and scooters are happening weekly in Australia and could become more common after Christmas unless consumers are given better advice.
Fire and Rescue NSW released shocking footage from the explosion showing one man running to escape the fireball while another man sprinted from the room as flames burst into the hallway.
The man, in his 20s, was treated for burns to his leg at St Vincent's Hospital.
Firefighters and NSW Police are investigating the cause of the blaze - suspected to have been a faulty e-bike battery that had been connected to power.
EV FireSafe chief executive Emma Sutcliffe said the incident could have been caused by toxic flammable gases coming from a damaged lithium-ion battery and might have followed "a loud popping noise like a gunshot".
She said fires caused by faulty e-bikes, e-scooters, battery-powered skateboards and hoverboards were a growing risk in Australia and overseas.
"This is happening pretty much on a weekly basis in Australia and after Christmas we will probably see that ramp up," she said.
"E-bikes and e-scooter battery fires are incredibly common and in London and New York they're seeing one of these every day, if not two or three."
Ms Sutcliffe said EV FireSafe, which was established to research battery fires and inform emergency service responses, began tracking light electric vehicle fires globally this year but found their numbers overwhelming.
"In the first six months of this year, we stopped counting at 500 battery fires in electric bikes and scooters," she said.
"We were able to track 238 injuries and at least 43 fatalities and all of those fatalities were due to fire."
The micro-mobility vehicles posed a high danger, she said, due to poor quality battery cells and battery management systems, poorly constructed frames, and a high risk of wear, tear or water damage to batteries that were often fitted low to the ground.
Damaged lithium-ion batteries can be prone to thermal runaway that leads cell temperatures to rise within milliseconds and create gases and fire.
The Australian Competition and Consumer Commission is preparing to release a report into the battery technology.
Ms Sutcliffe said consumers should only buy light electric vehicles from reputable brands and stores and should never charge a battery that had been damaged or submerged in liquid.
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