Risk Management for the Electric Vehicle Industry
If you had any doubt that electric cars are here to stay, just look at how many charging stations you see in parking lots, compared to two years ago. They are not just at high-end shopping malls anymore; now you even find them in the parking lots of big box wholesale stores. The new generation of car buyers, regardless of budget, is concerned about the effect of fossil fuel on the environment and is keen to avoid spending money on fuel by choosing an electric vehicle. Risk management is important for all vehicle manufacturers; cars are as dangerous as they are ubiquitous. Electric vehicles carry their own set of risks for consumers, and that means more legal risks for electric car manufacturers. Exploring the legal issues in detail before you make major business decisions can help you avoid being vulnerable to lawsuits.
Allocating Risk in Contracts with Parts Manufacturers
Any of the high-tech parts of an electric car can malfunction and cause injury. When that happens, the car manufacturer is at risk of being sued for product liability. The court will have to decide what share of responsibility belongs to which of the entities that could have prevented the accident and should have been aware of the risk. In your contracts with the manufacturers of electrical, mechanical, or computerized parts for your electric vehicles, you should be as specific as possible about which party is responsible for the testing of parts. Specifically, the parts should undergo testing at the component level, the system level, and the whole-vehicle level. Your contracts should specify who is responsible for conducting each test. You should also keep detailed documentation of test results; for the tests conducted by suppliers.
The Tesla Cruise Control Lawsuit: A Cautionary Tale
In 2019, Jeremy Banner of Delray Beach, Florida died when his Tesla Model 3 collided with a truck. His widow filed a lawsuit against the California-based Tesla company. She alleged that the car’s sophisticated cruise control system malfunctioned; if it had been working properly, Banner would have been able to steer the car out of the truck’s path and avoided the collision. Critics of the automated cruise control system describe it as “autopilot” and claim that it is inherently unsafe. Clearly, the decision to incorporate the current design of the cruise control system in Tesla vehicles is the result of much research and testing. Details about the outcome of the lawsuit are not publicly available, but product liability lawsuits can be very costly, especially if many plaintiffs have suffered injuries because of the product. Electric vehicle manufacturers can avoid the malfunction of technologically sophisticated systems by stipulating testing requirements in their contracts with suppliers. They can also mitigate their risk in product liability lawsuits by describing in detail which parties bear what responsibility for product malfunctions and for various levels of testing.
Contact a Lawyer About Electric Vehicle Lawsuits
If your company is involved in the manufacture or sale of electric vehicles, you should have a lawyer review all your business agreements and contracts.