A recent report from UK firm Thatcham Research has revealed that the lack of data on electric vehicle batteries is making it harder for insurers to cover EVs. Even though EV adoption rates have been on the rise for the past couple of years, the electric vehicle industry is still in its infancy. This means that there is limited data on issues such as assessing damage after accidents and affordable EV repair solutions that determine how motor insurers cover automobiles.
As a result, insurers have no way of assessing damage to EV battery packs or estimating the cost of repairs, and they are often forced to scrap EVs after relatively minor accidents. Furthermore, this increases insurance premiums for customers and reduces the incentive for motor insurance to offer coverage for electric vehicles.
Automotive risk intelligence company Thatcham Research published a report titled “Impact of BEV Adoption on the Repair & Insurance Sectors,” which outlines the lack of data on post-accident diagnostics and affordable options for EV repair that plague the industry.
The battery pack is the heart of every electric vehicle. Made up of thousands of individual battery cells, EV battery packs are meant to replace internal combustion engines in a global push for sustainability in the transportation sector. They are typically located along the bottom of EVs and can charge and discharge power for thousands of cycles for 10 to 20 years. However, despite being capable of lasting up to two decades, many EV batteries are scrapped after sustaining only minimal damage.
Electric vehicles tend to be pricier than their internal combustion engine counterparts, with the average new EV costing around $64,000 compared to $46,000 for a gas-powered car. This is mostly due to EV battery packs, which account for most of the cost of an EV. In fact, Thatcham found that the cost of EV battery replacement can be higher than the price of a year-old EV, meaning replacing EV batteries can be wildly uneconomical over the long-term.
Adrian Watson, who heads engineering research at Thatcham, explained that the current diagnostics abilities of the motor insurance sector simply cannot allow them to assess the status of a damaged EV battery. EVs also have an elevated risk of fire, and damaged models should be quarantined at least 49 feet from other buildings or vehicles, significantly increasing the space requirements for damaged electric cars as well as the associated costs.
As a result, insurance claims for electric cars take 14% more time to resolve and are 25.5% more costly than claims for gas-powered cars. These costs reduce insurer interest in covering electric vehicles and make it more expensive to own an electric car, reducing an already small market and hindering EV adoption.
As more models from various EV makers such as Workhorse Group Inc. (NASDAQ: WKHS) get onto the roads, increasing amounts of data about these new vehicles will become available, and insurers could soon have all the information they need to offer quality and affordable insurance services to EV owners.
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