Bharat Anand, Partner, along with Achint Kaur, Counsel, and Mukul Aggarwal, Principal Associate at Khaitan & Co, explore the legal protections available for faulty electric vehicles.
In India, the Electric Vehicles (EV) sector is projected to grow at a 45.5 per cent compounded annual rate from 2022 to 2030, with expected annual sales reaching 1.6 crore EVs by 2030. To manage the anticipated influx of EVs, it’s vital to address various risks, including safety and battery costs.
In terms of regulations, if a defective EV causes harm, the manufacturer or seller bears product liability, being responsible for compensating the consumer for any damage or inconvenience.
The Ministry of Road Transport and Highways (MoRTH) can enforce mass product recalls if a defect negatively impacts the environment, drivers, passengers, road users, or consumers; if the defect is reported to MoRTH; or if the product or component is faulty. To bolster EV safety, the Central Government has implemented technical standards such as AS-156 and AIS-038 (Rev 2), mandating tests for water immersion and thermal propagation and requiring smart battery management systems to prevent fires and overcharging.
These standards became mandatory from 1 October 2023 under the production-linked incentives and FAME II schemes to enhance human safety.
Globally, product liability laws in the EV sector are evolving. Courts are conducting detailed analyses to determine liability in cases involving autonomous or semi-autonomous vehicles, including those with artificial intelligence and IoT technologies.
For instance, demonstrating liability in high-tech automobiles often involves proving that a reasonable alternative design could have prevented the harm, a complex technical issue. In semi-autonomous vehicles, traditional negligence theories are used to establish liability, like determining if driver inattention contributed to the defect.
In a notable case in April 2023, a California court cleared Tesla Inc of liability in Justine Hsu versus Tesla Inc, ruling that the driver did not adhere to safety norms while using autopilot technology.
To improve EV safety, Indian companies can adopt several measures to protect their reputation and revenue. Developing a product liability strategy and a defence mechanism, including real-time performance logging and predictive battery maintenance, can help identify the source of damage. Conducting compliance assessments and periodic product risk management can proactively identify and address defects.
EV companies might also include safeguards in supply and distribution contracts, providing user instructions and warnings to outline customer responsibilities. These contracts can stipulate that products are provided ‘as is’ or ‘as available’ with limited warranties and excluding any implied warranties to the extent allowed by law.
These measures cover various aspects such as merchantability, fitness for a particular purpose, results obtained, indirect, consequential, incidental, special, or remote damages, and assume the risk, ensuring that the product’s suitability, safety, and performance meet intended requirements.
