Lithium batteries and sources of emerging risk

EVs are a progressive alternative to fossil-fuelled vehicles, but there is still a great deal to be learned about the technology that powers them. In the second of our 2025 Emerging Risks webinar series, we look at performance, safety and sustainability issues surrounding lithium batteries and evaluate them as a source of risk. The review is timely as a record 17 million EVs were sold last year[1].

Performance issues

There is evidence in some cases of a differential between claimed and real-world battery performance. Regulatory standards in respect of lithium batteries tend to focus only on safety. A battery's performance specifications are defined by agreement between the vehicle manufacturer and its technology supplier. James Frake, Managing Consultant Scientist at Exponent, said: “OEMs [Original Equipment Manufacturers] need to come to an arrangement with their supplier to provide a battery that meets their needs for the end product while also meeting safety standards".

A battery’s real-world performance - and hence its ability to deliver on the manufacturer’s specifications - depends upon several factors. Climate is highly relevant: in cold weather, for instance, electric vehicles may lose around 40% of their range. Age is another, as batteries can lose 2-3% of their capacity per year. As Meredith White, Associate at Clyde & Co in London pointed out, “Manufacturer performance claims are a source of risk and should be carefully reviewed to ensure that they cannot be criticised as being misleading.” Claims activity has already begun, and claimant lawyers could conceivably look to build upon the ‘Dieselgate’ cases, which centre upon real-world compliance with manufacturer emissions claims. 

Marketing a sustainable solution 

The marketing of sustainable or environmentally conscious products is fraught with hazard. Although EVs are marketed as an environmentally friendly alternative to conventional vehicles, the calculation of their carbon footprint and total environmental impact is complex. Bold sustainability statements are often best avoided, and it is essential that any sustainability claims are supported by data. Generic words such as 'clean' are subjective and susceptible to interpretation: the eventual substantiation of those claims will depend upon factors such as how and where the vehicle is manufactured, the source of the energy used to charge the vehicle and the recycling technology available at the end of the vehicle's life. EVs are also significantly heavier than petrol and diesel vehicles and their weight has environmental consequences. An overall sustainability assessment is likely to include the carbon start-up cost of a battery, the sourcing of raw materials, the transparency of the supply chain, the processes required to manufacture the cells, the consequences of day-to-day use and eventual recycling. 

Material toxicity

Lithium batteries contain a variety of materials: heavy metals such as cobalt and nickel, organic solvents and other chemicals which can be dangerous to human health and the environment. Risks may materialise at various stages of the product cycle, including toxic exposures during manufacturing and the escape of chemicals while the product is in use. There are reported examples of dangerous fumes being released, toxic chemicals persisting after lithium battery fires and harmful residues leaching into the soil or watercourses where batteries have not been properly disposed of.

“There is a risk of claims activity from exposure to the toxic chemicals contained in lithium batteries,” said Steven Crocchi, Associate at Clyde & Co in the U.S. “We could see allegations related to toxic exposure from assembly workers, consumers and potentially those who are concerned by environmental damage.”

One source of risk is through “off-gassing”, where lithium batteries swell or combust and release toxic fumes. There have been several instances in the U.S. requiring evacuations of battery plants and the adjacent areas. Natural disasters may exacerbate the risk. During the 2025 California wildfires, firefighters contended with toxic fumes released by the batteries of an estimated 400,000 EVs in the area, which were carried over a large area by the wind. Battery fires are comparatively difficult to extinguish, requiring up to 40 times more water than a conventional fire. Escaping extinguishment waters can in turn lead to soil and watercourse contamination.

ESG implications

Increasing demand for EVs could create pressures in the supply chain, causing consequences such as:

• Adverse environmental impacts of extracting raw materials on ecosystems, water availability and effective, responsible recycling.
• The protection of human rights in the supply chain. 
• Corporate transparency and accountability, adherence to local laws and compliance with disclosure requirements.

Sam Lawton, Senior Consultant Scientist at Exponent, made the point that meeting ambitious targets for electrification – not just of vehicles but of the entire energy grid - is likely to result in a significant increase in demand for critical materials. “The lack of access to these materials is one side of the problem. The other side is getting the expertise in the right places to ensure a consistent supply of the materials”, he said.

The recent trend of greenwashing claims is highly relevant in this context. Companies should be aware of the importance of regulatory and environmental compliance, as rules and penalties become increasingly stringent.

“Complex questions are starting to arise around the expanding use of lithium battery technology,” concluded Dave Dhillon, Senior Counsel at Clyde & Co in Toronto. “In a changing landscape, it’s essential that companies stay up to date with new developments and regulations in this area".

To learn more about this issue, watch our webinar here

[1] Parodi, A. (2025, January 14). Reuters. https://www.reuters.com/business/autos-transportation/global-electric-vehicle-sales-up-25-record-2024-2025-01-14/