Battery thermal management (BTM) system is indispensable for compact lithium-ion (Li-ion) energy storage system used in aerospace and automotive applications. Besides maintaining the battery temperature within an optimum range, thus extending their lifespan and improving their electrochemical and electrical performance, the BTM system also needs to be well designed with considering the rigorous constraints imposed by the budgets in weight and volume. In this paper, a phase change material (PCM) based passive BTM system is studied. An internal cooling option is compared with the traditional external cooling design in terms of their capability in reducing the maximum temperature and improving the temperature uniformity inside battery packs with different sizes. The radial thermal conductivity of the battery is also studied regarding its effect on the thermal performance of the BTM system. Finally, the PCM usage, normalized specific energy, and space utilization ratio of the internal and external BTM systems are compared.