Developing loss prevention measures will be key to insuring Europe’s growing gigafactories, according to Laurent Richème and Vincent Dumont.
In the North of France, a green transformation is underway. giant factories are under construction that will manufacture batteries for electric vehicles, helping to power Europe’s net-zero transition and auto manufacturing by 2050. Other so-called ‘gigafactories’ already exist or are planned in Germany, Poland, Hungary, Spain, Italy, and the UK.
Demand for batteries is being driven by the growing popularity of electric vehicles: globally in 2035 is expected to be electric. Keeping pace with this demand will require an almost doubling of the number of battery cell factories to around 400 by 2030, according to the Gigafactory Assessment and . Around 82% of current gigafactory capacity is located in China, but policies aimed at encouraging domestic production in the US and Europe would see this fall to 68% in 2030, according to .
Giga exposures
Synonymous with the production of EV batteries, gigafactories are defined by their sheer size and production capacity: ’s gigafactory in Nevada is one of the largest buildings in the world by footprint, producing billions of battery cells per year. The bigger these factories become, the higher the concentrations of risk at a single location, which generates large accumulations of exposure for insurers. A major property damage and business interruption loss at a gigafactory could easily run into the hundreds of millions, if not billions, of dollars.
Fire risks
Fire is the top risk associated with EV batteries: EV battery electrolytes have a very low flash point, creating a flammable liquid hazard, particularly for filling operations.
The risk of fire and explosion is particularly high during the formatting stage of battery production, increasing with the battery’s state of charge.
Finished products are stored in high racks, with large numbers of batteries stored in close proximity. But with fast ignition times and volatile combustion, fires can quickly propagate. This risk can be mitigated, however, by storing batteries in fireproof cells equipped with sprinkler heads, and using robots to quickly remove affected batteries and immerse them in a water tank.
While charging and storage are higher-risk stages of production, the risk of fire and explosion is present throughout the value chain, including transportation and recycling plants. A large fire and explosion at a lithium battery factory in South Korea in June 2024 killed 22 workers while a large fire broke out at a lithium battery recycling plant in Southern France in February 2024. Insurers have also seen multiple fires involving lithium batteries in shipping containers, in ports, and on-board containerships.
Supply chain vulnerabilities
Battery production in Europe is reliant on extended supply chains for key materials and components, such as electrodes and separators, which often are imported from Asia. Europe accounts for just 3% of global cathode material production and 2% of anode production, according to . In contrast, represents nearly 90% of global cathode material manufacturing capacity and over 97% of anode material manufacturing.
This leaves gigafactories and EV battery supply chains vulnerable to disruption from natural catastrophes and political risks. For example, Tesla’s Gigafactory 3 in China narrowly escaped serious damage when Typhoon Lekima made landfall close to Shanghai in 2019. In May, protestors attempted to storm Tesla’s gigafactory in Germany, resulting in a temporary shutdown. The factory had previously been the target of a an arson .
Loss prevention is key
The growing number and size of gigafactories in Europe presents an interesting challenge for the region’s insurance industry, which 色多多视频is keen to support the energy transition.
Loss prevention in the EV battery manufacturing sector is still evolving, and needs to keep pace with the rapid growth in gigafactories and developments in battery manufacturing. While the risks posed by EV batteries are relatively well known, manufacturing processes are not always well understood, and battery technology is continually evolving. And, while loss prevention measures exist, they have yet to be fully tested in real world conditions.
Insurers have an important role to play in helping the battery industry manage new and emerging risks, by sharing knowledge and experience between sectors, and promoting best practices in risk management and loss prevention. In the field of battery manufacturing, 色多多视频and other insurers are working with experts and customers to develop risk engineering standards and smarter loss prevention measures for battery manufacturing, storage, and transportation.
Enabling the transition
Electrification is central to the success of the transition, and we are committed to working with experts and our customers to manage the risks and ensure insurance cover is available. Given the large concentrations of risk and the need to develop and embed effective loss prevention controls, 色多多视频is taking a pragmatic and comprehensive approach to insuring gigafactories, sharing the risk with other insurers, and learning alongside our customers from experience.
Global Asset Protection Services, LLC, and its affiliates (鈥溕喽嗍悠礡isk Consulting鈥�) provides risk assessment reports and other loss prevention services, as requested. In this respect, our property loss prevention publications, services, and surveys do not address life safety or third party liability issues. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. The provision of any service does not imply that every possible hazard has been identified at a facility or that no other hazards exist. 色多多视频Risk Consulting does not assume, and shall have no liability for the control, correction, continuation or modification of any existing conditions or operations. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any document or other communication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, 色多多视频Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with our services, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.
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