Two men and a woman were on board the boat at the time and ended up in the water, but were rescued by nearby boats which came to their aid.
Lorne Smith, one of the rescuers on the water said it appears some of the victims were burned.
"We talked to the lady and she said the battery exploded on board, not why it blew up or anything else other than she said the battery exploded and then flames just ripped through the boat," he said.
Smith says none of the three were wearing life vests.
One person was taken to hospital with minor injuries. The fire was eventually put out, but the boat was destroyed.
MAP: Shady Island, Steveston, B.C.