,
08/22/2022 · 5 minute read
A record 6.6 million electric vehicles (EVs) were sold globally in 2021, double the number in 2020, bringing the total number of EVs on roads worldwide close to 16.5 million. This pace has continued in 2022, with 2 million EVs sold in the first quarter, up 75% from a similar period in 2021.
As the automotive industry moves rapidly towards exclusively manufacturing zero-emission vehicles, the lithium ion (Li-ion) batteries powering EVs are an essential part of this transition, and their risks and opportunities must be managed accordingly.
The rising EV trend in the UK reflects the global one. According to the Society of Motor Manufacturers and Traders (SMMT), battery EV registrations continue to grow with 12,243 of the latest zero-emission cars joining UK roads in July 2022 — up 9.9% from the same month last year, and taking a 10.9% market share — up 9% from last year. EVs overall comprised 28.9% of all new car registrations in July.
Source: July 2022, Society of Motor Manufacturers and Traders (SMMT)
To further advance the zero-emission revolution in the UK, the British government has banned sales of new petrol and diesel cars starting in 2030, with hybrids banned beginning in 2035. This has caused some friction with car manufacturers, whose battery-powered cars are in different stages of development and who are dependent on a still developing EV supply chain strained by the Ukraine-Russia conflict, global demand, and inflationary pressures.
To assist these manufacturers, the UK Government has set up the Automotive Transformation Fund, a capital-focused investment project to help industrialise the EV supply chain at scale in the UK. This fund will support, for example, projects focused on the production of batteries, electric machines, and power electronics.
Many organizations are already involved in the manufacturing and storage of the Li-ion batteries essential to the continued growth of the UK’s EV sector. And the construction of production sites currently underway will help ensure a steady supply of these batteries.
Given the known and emerging fire and other property risks[i] related to such facilities, in order to secure the necessary insurance coverage and financing for projects, Li-ion battery manufacturers need to anticipate insurer and investor concerns and proactively demonstrate their risk management approach and processes.
There are multiple actions you can take to reduce your exposures and prepare for potential losses. These include:
The move to a net-zero future requires the EV sector to continue to evolve. As a rapidly developing industry, both risks and opportunities will emerge along the supply chain. A holistic approach to reducing the risks associated with Li-ion battery manufacturing and storage can help manufacturers secure the insurance coverage required by their financing partners, better enable their growth, and confidently meet regulatory requirements and consumer demands.
[i] https://www.marshcommercial.co.uk/articles/battery-energy-storage-fire-risks-explained/
[ii] https://www.energy-storage.news/preventing-thermal-runaway-in-lithium-ion-energy-storage-systems/
Risk Partner, Marsh Advisory
Marsh UK Industries - Automotive & Manufacturing Industries Leader
United Kingdom
Article,Case Study
08/27/2023