Fundamental understanding of the underlying diffusion-mechanics interplay in the intercalation electrode materials is critical toward improved life and performance of lithium-ion batteries for electric vehicles. Especially, diffusion induced microcrack formation in brittle, intercalation active materials, with emphasis on the grain/grain-boundary (GB) level implications, has been fundamentally investigated based on a stochastic modeling approach. Quasistatic damage evolution has been analyzed under lithium concentration gradient induced stress. Scaling of total amount of microcrack formation shows a power law variation with respect to the system size. Difference between the global and local roughness exponent indicates the existence of anomalous scaling. The deterioration of stiffness with respect to microcrack density displays two distinct regions of damage propagation; namely, diffused damage evolution and stress concentration driven localized crack propagation. Polycrystalline material microstructures with different grain sizes have been considered to study the diffusion-induced fracture in grain and GB regions. Intergranular crack paths are observed within microstructures containing softer GB region, whereas, transgranular crack paths have been observed in microstructures with relatively strong GB region. Increased tortuosity of the spanning crack has been attributed as the reason behind attaining increased fracture strength in polycrystalline materials with smaller grain sizes.