Electric vehicles (EVs) are currently emerging as alternative vehicles due to their high energy efficiency and low emissions during driving. However, regarding the raising concern, the safety of EVs can further be improved before they completely replace conventional vehicles. This paper focuses on reviewing the safety requirements of EVs, especially those powered by Li-ion battery, based on the mechanical abuse tests from the international standards, national standards, regulations and other laboratories standards, and safety of occupants from the regulations and safety programs. Moreover, the publicly reported real-world fire incidents of EVs based on road crashes were collected and reviewed. The objective is to highlight the gap and challenges arose between the current safety requirements and real-world fire incidents of EVs and provide the way for assisting the future research in the area of EV safety, particularly light duty passenger vehicle. The serious challenges observed include high impact speed, multi-crashes per incident, multiple barriers of different types involved in the accident, and post-crash safety (serious injury and demise) of occupants and rescue teams. While addressing these challenges, this review will aid researchers and manufacturers working in batteries, EVs, and fire safety engineering to narrow the gap and enhance the safety of future EVs in areas of battery materials, fire extinguishing, and vehicle’s body structure.