ELECTRIC cars risk becoming effectively uninsurable due to costs involved in repairing their batteries, industry experts have warned.
Chief executive of Thatcham Research, the motor insurers’ automotive research centre, Jonathan Hewett, said analysts often have trouble accurately putting a figure on the repair price.
Indranil Aditya/NurPhotoElectric cars are becoming effectively uninsurable, according to insiders[/caption]
GettyElectric cars can be expensive to repair, costing around a quarter more to fix, on average, than a petrol or diesel vehicle[/caption]
He said lack of “insight and understanding” about the cost of repairing damaged batteries was pushing up premiums.
“The challenge is that we have no way of understanding whether the battery has been compromised or damaged in any way,” Mr Hewett said.
This has resulted in some providers declining to provide cover altogether, according to Mr Hewett.
Electric cars can be expensive to repair, costing around a quarter more to fix, on average, than a petrol or diesel vehicle.
They are routinely being written off after minor collisions because of the cost and complexity of fixing their batteries.
“The threat of thermal runaway means that a catastrophic fire could take place if the cells of the battery have been damaged in a collision,” he said.
“What we’re struggling to understand at the moment is how we approach that diagnostic technique. It’s like a doctor trying to understand what’s wrong with you without any notes or an X-ray.”
John Lewis Financial Services stopped providing new and existing customers insurance for electric cars last month to give its underwriter, Covéa, time to analyse risks and costs.
Aviva removed insurance products for the Tesla Model Y earlier this year but restored them several months later.
Vehicle repair costs rose 33 per cent in the first quarter of 2023 compared to the same period in last year.
This helped to push annual premiums to record highs, according to the Association of British Insurers.
Average electric car insurance costs rose 72 per cent in the year to September, compared to 29 per cent for petrol and diesel models, according to Confused.com.
Mr Hewett said electric car premiums would begin to level out and match those of petrol and diesel cars once actuaries had the tools needed to better understand the risks of insuring the vehicles.
However, he added: “The battery is an extremely expensive component of an electric vehicle and until we find efficient ways of dealing with it we have the challenge of high premiums for electric vehicles, which nobody wants.”
Some customers have been quoted more than £100 per week to insure electric vehicles and others report that their premiums have doubled or tripled in a year.
The steep rise in the cost of repairing electric car stems from recommendations that they should to be kept 50ft apart in repair yards over fears they may explode.
Government guidelines suggest electric vehicles with damaged batteries should be “quarantined” to prevent battery fires, which are typically harder to put out than fires in petrol or diesel cars.
The London Fire Brigade has warned that blazes involving lithium batteries are the fastest growing fire risk in London.
It attended 87 e-bike and 29 e-scooter fires in 2022.
Paris’s transport operator shelved 149 electric buses last year after two caught fire on separate occasions.
The website Tesla-Fire.com lists 25 reports of Teslas catching fire globally since the beginning of this year.
Thatcham Research said insurers would have to spend an additional £900million a year on quarantine facilities for damaged cars to meet the required safety measures by 2035.
This comes as more battery-powered vehicles take to the roads – expenditure forecast to add £20 a year to car insurance premiums.
Greg Smith, a Conservative MP who sits on the Transport Committee, said the battery issues are “yet another reason electric vehicles aren’t remotely suitable for the mass market yet”.
“We should be looking to other technologies, like synthetic fuels and hydrogen, that will be more reliable and friendly to the planet,” he said.
However, supporters of electric vehicles have said their benefits, such as being better for the environment, outweigh potential battery woes.
Other drawcards include studies suggesting they could save drivers money in the long run – including on energy bills thanks to a new government scheme introduced this year.
The Energy Saving Trust says EVs have lower servicing and maintenance costs and are cheaper to refuel than petrol and diesel vehicles.
© 2023 Bloomberg Finance LPSome customers have been quoted more than £100 per week to insure electric vehicles[/caption]