Challenges Faced by Insurers in Repairing Electric Vehicle Batteries: Thatcham Research
The Challenges of Insuring Electric Vehicles: A Barrier to Adoption
Electric vehicles (EVs) are the future of transportation, offering a cleaner and more sustainable alternative to traditional fossil-fuel vehicles. However, a lack of data on EV batteries is posing a significant challenge for insurers, leading to scrapped EVs after even mild accidents. This issue not only undermines the potential gains from going electric but also hinders the widespread adoption of EVs.
Thatcham Research, a British automotive risk intelligence company, highlighted the “concerning lack of affordable or available repair solutions and post-accident diagnostics” in a recent report funded by the UK Government’s innovation agency Innovate UK. Insurers are struggling to assess and repair damaged EV batteries, often resulting in the total write-off of cars with low mileage. This not only leads to higher premiums for EV owners but also raises questions about the economic feasibility of owning an EV.
Batteries can account for up to half of an EV’s cost, and replacing them can be more expensive than the used price of the vehicle itself after just one year. This makes it uneconomical for insurers to repair EVs with damaged batteries, further complicating the issue.
Adrian Watson, Thatcham’s head of engineering research, emphasized the need for access to data on the state of health of EV batteries after accidents. Without this crucial information, insurers are left in the dark when making decisions about whether to repair or write off an EV.
The Society of Motor Manufacturers and Traders (SMMT) CEO, Mike Hawes, expressed a willingness to collaborate with insurers to address these challenges and ensure that damaged EVs are properly assessed and repaired. However, with only around 1.65% of cars on Britain’s roads being electric, the issue of insuring EVs is becoming increasingly urgent.
In addition to the cost and repair challenges, damaged EVs also pose a fire risk, requiring them to be stored outside at a safe distance from other objects. Thatcham highlighted the lack of adequate storage facilities for damaged EVs, further complicating the repair process.
As the automotive industry continues to shift towards electrification, it is crucial for insurers, manufacturers, and policymakers to work together to address the challenges of insuring EVs. By improving access to data, developing affordable repair solutions, and expanding storage facilities for damaged EVs, we can overcome these obstacles and accelerate the adoption of electric vehicles. Only then can we fully realize the environmental and economic benefits of transitioning to a cleaner and greener transportation system.