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 or business or even insurance company, how do you account for these processes?
Look, California Washington Oregon New York have all put out edicts that say by a certain date, all vehicles have to be electric that are sold could be 2030-2035. And sometimes it just outright bans the sale of gasoline vehicles in that state. And those, 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 so let’s take a look at them and see how you can benefit from them as a business or avoid consequences from them as a consumer.
So the first question is will the electric grid be able to have 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. That’s a good thing. But there are some 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 on the climate? And if it isn’t, how is that going to affect the law being put in place? Certainly, 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. So 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. Look if a battery on an electric vehicle lasts 10 years or 12 years, what do you do at the end of that time? When a gas tank runs out of gas it’s empty. You don’t have to do anything with it. 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? Look these electric vehicles create waste where it’s kind of like nuclear plant waste and there’s no place to put it that’s good and not 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 hundreds of billions of dollars in rebates subsidies incentives for this type of clean energy and the government is boosting this. That’s an opportunity for businesses that are in the business of wind-solar battery energy storage. But you’re going to take a little bit of a speculative risk if you don’t know what the model is going to be for that business in the future. And what are the risks? Look if you have a big solar farm and there’s a hailstorm that comes through, how has that kinda affected you or your insurance company? And 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 that 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 for it or more importantly, take advantage of opportunities for this migration to electric vehicles or other types of non-fossil fuel development.