The Expert Podcast

Many states are putting forward a very ambitious EV adoption timeline, and there's some domino effect that could come from that. As a consumer, business, or even insurance company, how do you account for these processes? Look at California, Washington, Oregon, and New York—these states have all put out edicts that say by a certain date, all vehicles sold have to be electric, which could be 2030 or 2035. Sometimes, it's just a ban outright on the sale of gasoline vehicles in that state. These rules and regulations are designed to speed up the process of electric vehicles, but there may be some unintended consequences and even unprepared results from those. Let’s take a look at them and see how you can benefit from them as a business or avoid consequences as a consumer.

The first question is, will the electric grid be able to handle all these EVs? In a state like California, which already has the largest percentage of electric vehicles in the country—16% of cars sold are fully electric—this is a good thing. But there are questions about whether or not it’s sustainable. If you have all these EV chargers but they’re fueled by coal power plants, is there much of a net difference in the climate? And if there isn’t, how is that going to affect the laws being put in place? California is putting in new power plants and shutting down some of the old fossil fuel generators, but they’re having to buy power from natural gas plants to prevent blackouts.

In addition to that, if they’re not built to modern standards, some of these battery systems can catch fire, which means you have to have insurance for that. Is the insurance market prepared for this potential new risk? The other part of it is recycling the batteries. If a battery on an electric vehicle lasts 10 to 12 years, what do you do when that time is up? When a gas tank runs out of gas, it’s empty, and you don’t have to do anything with it. But when a battery runs out in 10 years, you have to do something with that battery. If you’re putting in another one, can it be recycled? If these electric vehicles create waste similar to nuclear plant waste, and there’s no place to put it, that’s going to be a potential problem if there’s not a plan in place to get rid of these worn-out batteries.

On the opportunity side, there are many, many hundreds of billions of dollars in rebates, subsidies, and incentives for this type of clean energy. The government is boosting this, which is an opportunity for businesses in the wind, solar, and battery energy storage industries. However, you’re going to take a bit of a speculative risk if you don’t know what the model for that business will look like in the future.

What are the risks? If you have a big solar farm and there’s a hailstorm that comes through, how will that affect you or your insurance company? Do you have coverage for that? Insurance companies are starting to factor that in, but you also have to make sure that they understand the risks and you understand your risk as an insured. Some of these questions aren’t answered yet, but whoever answers them best will be in a position to avoid potential consequences for not being prepared—or more importantly, to take advantage of opportunities for this migration to electric vehicles or other types of non-fossil fuel development.