The cost of repairing electric vehicles (EVs) has become a concern for both car owners and insurance companies. Mark Fry, an engineering manager at Thatcham Research, highlights the issue, saying that replacing a damaged battery with a new one, factoring in labor and hire car expenses, often makes it uneconomical to repair the car.
The availability of repairers in the UK is also a concern, as noted by a spokesman for the Association for British Insurers. The EV insurance market is currently facing challenges, with major retailers like John Lewis ceasing to offer insurance for EVs after its underwriter, Covéa, withdrew cover for these vehicles. Tim Zawacki, an analyst at S&P Global Market Intelligence, explains that some US-based insurance companies also exclude EVs from their coverage, as real-world experience with EV repairs is still limited.
Battery-related issues can lead to write-offs, according to a spokeswoman for Admiral, a major insurer in the UK. Without the ability to repair, recycle, or repurpose a battery, it often results in a total loss due to its high value. Christoph Lauterwasser at the Allianz Center for Technology, a German research institute owned by insurance giant Allianz, points out that damage to the underside of an EV can lead to a battery casing getting scratched, causing a total replacement that is quite expensive.
Although EV claims currently make up just 2 percent of the total volume of automobile-related claims handled by Allianz, they account for about 10 percent of the company’s costs. In Western markets, EVs tend to have a higher percentage of materials that are difficult to repair, such as aluminum or composites. As a result, if such components are damaged in a collision, they are likely to require replacement, thereby increasing insurance costs associated with EVs.
Ryan Mandell, director of claims performance for Mitchell, a collision repair specialist in the US, points out that the lack of established repair procedures for EVs is contributing to the swelling insurance costs associated with these vehicles versus internal combustion engine (ICE) vehicles. He notes that while the frequency of EV total write-offs is not exceeding those for comparable high-end ICE vehicles at the moment, the overall costs associated with repairing EVs are a growing concern in the industry.
Moreover, the complex nature of EV components and the specialized skills and equipment required to repair them add to the costs. These factors, along with the limited availability of repairers and the high value of EV batteries, contribute to the economic challenges of repairing EVs, making it a matter of contention for both car owners and insurance companies.
Insurers are closely monitoring the repair and maintenance costs associated with EVs and are working to develop strategies to manage these costs effectively. As the EV market continues to grow, insurers are likely to invest in specialized training for repairers and develop repair standards and guidelines for EVs. This proactive approach will help insurance companies mitigate the financial risks associated with repairing EVs and support the sustainable growth of the electric vehicle market.