Separator integrity is an important factor in preventing internal short circuit in lithium-ion batteries. Local penetration tests (nail or conical punch) often produce presumably sporadic results, where in exactly similar cell and test set-ups one cell goes to thermal runaway while the other shows minimal reactions. We conducted an experimental study of the separators under mechanical loading, and discovered two distinct deformation and failure mechanisms, which could explain the difference in short circuit characteristics of otherwise similar tests. Additionally, by investigation of failure modes, we provided a hypothesis about the process of formation of local "soft short circuits" in cells with undetectable failure. Finally, we proposed a criterion for predicting onset of soft short from experimental data.