Are Electric Vehicles Becoming Too Expensive to Insure?
Electric vehicles (EVs), once thought to be the environmentally-friendly future of driving, now risk becoming effectively impossible to insure due to the unpredictable costs involved with repairing their batteries.
Jonathan Hewett, CEO of Thatcham Research, stated:
“The challenge exists because we lack insight and understanding regarding the expense of fixing damaged electric vehicle batteries, which is causing premiums to rise and some providers to decline coverage completely.”
Why Are EV Batteries So Costly to Repair?
Fixing electric cars costs approximately 25% more on average than repairing petrol or diesel vehicles. EVs tend to get written off after minor collisions because fixing their batteries is pricey and complex.
“We have no method to know if the battery got compromised or damaged. Thermal runaway means a catastrophic fire could occur if the battery’s cells got damaged in a crash. Currently we struggle to understand how to approach that diagnostic technique. It resembles a doctor attempting to evaluate you without notes or X-rays.”
Electric cars risk Becoming uninsurable
Insurers lack the tools to properly assess the risks of covering EVs, resulting in premiums spiking to exceed £100 per week in some cases.
Additional Factors Raising Repair Expenses:
- Quarantine Requirements: Damaged EVs must be kept 50ft apart due to fire risks, necessitating costly quarantine facilities.
- Battery Fires: EV battery blazes are typically more difficult to extinguish than petrol/diesel vehicle fires.
- Short Circuit Risk: Crashed EVs risk short circuiting and catching fire if battery cells get damaged.
- Lack of Repair Data: Insurers lack sufficient repair data to accurately price premiums.
What Does This Mean for Drivers?
Soaring insurance costs threaten to make electric vehicles unaffordable for many motorists. Until diagnostic techniques improve, allowing insurers to better understand EV battery repair risks, premiums are likely to remain high.
Some solutions that could help lower prices include:
- Improved battery shielding to reduce fire risks
- Development of enhanced battery diagnostics after crashes
- More transparency from automakers on battery replacement costs
- Growth of third-party EV battery repair options
For now, drivers interested in switching to an EV may want to brace themselves for higher than expected insurance rates. But in time, as insurers gain more data on EV repairs, premiums should stabilize – though the days of low-cost electric vehicle insurance may be over.