Verisk: A Shift to More EVs on The Road Could Have Far-Reaching Impacts

What emerging risks could electric vehicles present as they become more widespread?

Verisk experts recently explored the current EV landscape and hypothesized what insurance concerns the vehicles could prompt in the future. During a webinar presentation, Greg Scoblete, a principal on Verisk’s Emerging Issues team, said a shift to more EVs on the road could have far-reaching impacts.

“Without being overly dramatic, I do think it’s fair to say that this is a transition that could potentially represent a very profound shift with sweeping consequences impacting not just our vehicle fleets, but possibly also our infrastructure, our energy grids, our health, our environment, our supply chains, our domestic manufacturing base and more,” Scoblete said.

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A transition to electric vehicles may influence more than auto exposures—property, liability and cyber risk could be impacted, too, he added.

Electric Vehicle Market Landscape

According to data from Kelly Blue Book, EVs made up a record 9% of all new cars sold in September. KBB noted that last quarter, Americans bought 11% more EVs than they had in the same quarter a year before, and that 26,626 used EVs were bought in September—marking a 68.3% increase from September 2023.

Looking ahead, Bloomberg NEF projected in July that a third of new car sales could be EVs by 2027. That the year the EPA’s new vehicle emissions rules will be phased in. Those rules are expected to be fully in place by 2032.

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Federal tax credits could accelerate EV sales, Scoblete explained, though he did acknowledge that could look different following the presidential election. (The Verisk webinar was held on Monday, Nov. 4.) The United States currently has more than 100,000 public or private EV charging ports, with the Biden Administration setting a goal of reaching 500,000 by 2030.

Battery Fires and Thermal Runaway

Although EV battery fires may be low-frequency events, they could potentially contribute to claim severity given how flammable “everything may be around them,” Scoblete said.

Citing data from the National Transportation Safety Board, Bureau of Transportation Statistics and government recalls, researchers at AutoInsuranceEZ found that electric vehicle fires occur less frequently than traditional and hybrid vehicle fires. Per the findings, EVs catch fire at a rate of about 25 incidents per 100,000 sales. That number is less than gas-powered (about 1,530 fires per 100,000 sales) and hybrid cars (about 3,475 fires per 100,000 sales).

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Nevertheless, Scoblete explained that when an EV battery enters thermal runaway, it can burn significantly hotter than an internal combustion engine and require “a lot more water to extinguish,” meaning it can take longer to put the fire out.

And, if energy is left in the battery after the fire has been extinguished, there’s a risk that energy can trigger a new thermal runaway, he said, adding that the risk can be for hours, days and even weeks after the fire has been extinguished.

“But it does continue to be the case, at least according to public data sources, that EV fires do not appear to happen more frequently than internal combustion engine fires,” Scoblete said, noting that this finding extends beyond US EVs and to the international level.

Fire Proximity Poses Potential Property Risks

The EV FireSafe database reported last year that 18% of EV fires occurred when vehicles were charging. Two percent occurred within an hour of disconnecting from the charger. Charging-related fires could pose a concern to nearby property, Scoblete said, as EV fires can burn very hot and take a long time to put out.

“The other related issue here is that cars and homes — and a lot of home furnishings, in general — have just become more flammable over time,” Scoblete added. “That’s because the materials that are used inside vehicles, used inside a lot of home furnishings, include plastics. Plastics derived from fossil fuels, which are highly flammable, other synthetic materials are also highly flammable.”

Right to Charge legislation in some states generally stipulates charging station requirements for buildings, Scoblete explained. This could be another factor, he said, that determines where and how close that infrastructure may be placed to adjacent property.

Cyber Risks Potentially Presented at Charging Stations

Heavy Duty Trucking reported in late 2022 that since 2010, there had been a 344% increase in cyberattacks against vehicles. Scoblete noted that the cyber vulnerabilities of an electric vehicle may not be all that much different from other modern, connected vehicles — even if some modern EVs do seem to have more sophisticated software control.

“But there is a very important distinction here,” he said, “and that is the charging stations. The charging stations can act, at least potentially, as another vector that spreads malware to an EV. But not just necessarily passing electrons to cars; it can also be a data transfer as well.”

Compromising one aspect of the EV ecosystem — the vehicle, charging equipment, cloud or other infrastructure — with malware does create the potential risk of progression throughout the ecosystem, Scoblete said.

“Even up to and including electrical utilities,” he said. He added that the charging stations themselves are a cyber vulnerability because they can collect sensitive customer data and could be vulnerable to hacks, in theory.

Go Deeper

The full webinar included information about how electric vehicles could impact road infrastructure and tighten battery supply chains. Bi-directional charging, electric vehicle adoption in commercial auto and more were also explored during the presentation.