Electric vehicles are rapidly gaining popularity, but what hidden risks lie beneath their widespread adoption? Verisk experts have delved deep into this evolving landscape to shed light on the potential insurance concerns and far-reaching impacts.

Uncovering the Hidden Perils of Electric Vehicle Expansion

Electric Vehicle Market Dynamics

According to the latest data from Kelly Blue Book, electric vehicles have made a significant mark, accounting for a record 9% of all new cars sold in September. Last quarter, Americans showed a remarkable 11% increase in EV purchases compared to the same period last year. In September alone, 26,626 used EVs were bought, marking a staggering 68.3% rise from 2023. Looking ahead, Bloomberg NEF projected that by 2027, a third of new car sales could be electric. This coincides with the EPA's new vehicle emissions rules set to be phased in, with full implementation expected by 2032. The United States is already making strides, with more than 100,000 public or private EV charging ports, and the Biden Administration aiming to reach 500,000 by 2030.The growth of the electric vehicle market is not just about sales numbers. It's a transformation that could potentially reshape multiple aspects of our lives, from vehicle fleets to infrastructure, energy grids, health, environment, supply chains, and domestic manufacturing.

Battery Fires and Thermal Runaway

While electric vehicle battery fires may be infrequent events, their potential impact on claim severity cannot be ignored. As everything around an EV battery is highly flammable, these incidents can cause significant damage. Research by AutoInsuranceEZ, citing data from the National Transportation Safety Board, Bureau of Transportation Statistics, and government recalls, shows that electric vehicle fires occur at a rate of about 25 incidents per 100,000 sales. This is significantly lower than gas-powered vehicles (about 1,530 fires per 100,000 sales) and hybrid cars (about 3,475 fires per 100,000 sales).However, when an EV battery enters thermal runaway, it burns much hotter than an internal combustion engine and requires a substantial amount of water to extinguish. This means it takes longer to put out the fire. Moreover, if energy remains in the battery after the fire is extinguished, there is a risk of a new thermal runaway, which can persist for hours, days, or even weeks. But, according to public data sources, EV fires do not seem to occur more frequently than internal combustion engine fires, and this finding holds true not only in the US but also on an international level.

Fire Proximity and Property Risks

The EV FireSafe database reported that 18% of EV fires occur during charging, and 2% happen within an hour of disconnecting from the charger. Charging-related fires pose a significant concern to nearby property as they burn very hot and take a long time to put out. Additionally, over time, cars and homes, along with many home furnishings, have become more flammable due to the use of plastics and other synthetic materials derived from fossil fuels.Right to Charge legislation in some states stipulates charging station requirements for buildings. This factor determines where and how close the charging infrastructure is placed to adjacent property, adding another layer of complexity to property risk management.

Cyber Risks at Charging Stations

Heavy Duty Trucking reported a 344% increase in cyberattacks against vehicles since 2010. Scoblete noted that the cyber vulnerabilities of electric vehicles are not significantly different from other modern, connected vehicles, although some modern EVs do have more sophisticated software control.The charging stations, however, present a unique challenge. They can act as a vector for spreading malware to EVs, not only by passing electrons but also through data transfer. Compromising any aspect of the EV ecosystem with malware has the potential to spread throughout the system, including electrical utilities. The charging stations themselves are a cyber vulnerability as they collect sensitive customer data and are vulnerable to hacks.

Going Deeper

The full webinar provided comprehensive information about how electric vehicles could impact road infrastructure and tighten battery supply chains. Bi-directional charging, electric vehicle adoption in commercial auto, and many other aspects were also explored, offering a holistic view of the electric vehicle ecosystem.