We develop mathematical models for the role of hepatitis B e-antigen in creating immunological tolerance during hepatitis B virus infection and propose mechanisms for hepatitis B e-antigen clearance, subsequent emergence of a potent cellular immune response, and the effect of these on liver damage. We investigate the dynamics of virus-immune cells interactions, and derive parameter regimes that allow for viral persistence. We modify the model to account for mechanisms responsible for hepatitis B e-antigen loss, such as seroconversion and virus mutations that lead to emergence of cellular immune response to the mutant virus. Our models demonstrate that either seroconversion or mutations can induce immune activation and that instantaneous loss of e-antigen by either mechanism is associated with least liver damage and is therefore more beneficial for disease outcomes.