The EV Repair Penalty

Introduction: The Premium Paradox

EV auto insurance is around 40% more expensive every year than a similar gasoline-powered car. Why? Insurance rates are based on the total risk of the pool. Even a minor EV accident can cost thousands of dollars in claims, which means carriers have to charge higher premiums across the board.

In this guide, we will talk about the EV repair penalty, what causes it, and what you can do as an EV owner.

Factor 1: The Battery Dilemma & Early Total Losses

Battery Pack Issues EVs have batteries. These high-voltage traction battery packs can be extremely expensive, dwarfing anything else you might need to repair for the car. Replacing a battery pack can cost $6,000 to over $20,000, depending on which EV model it is.

Since the batteries are so expensive, it would be excellent if they are well protected. Modern EV designs often put the battery pack directly into the structural frame of the car, known as a cell to chassis design. This can improve things such as the structural rigidity for safety’s sake–however, the battery casing can get dented more easily. If it is dented and there is no modular design, then you might have to swap out the entire battery pack for greater costs instead of sending the car to the shop for a single, simple body repair.

If a battery pack gets slightly damaged and you still drive with it, it could cause serious fires or other health concerns. Because of that, it is often recommended to completely replace the battery pack in case of collision.

Difficult Diagnostics Proprietary software is essential for many EV makers. Due to safety risks and proprietary software locks, body shops often cannot perform internal diagnostic scans on compromised batteries. That potentially means that these body shops cannot offer any real EV repair possibilities, so that EV owners are forced to find a shop with the correct diagnostic abilities.

One common issue that occurs is that if there is one sensor glitch or bad cell, it can snowball into issues elsewhere due to interconnected modules.

If you’re seeking out a shop that can diagnose the damaged EV, the shop also knows the demand is there. The limited shop options you have leads to costlier labor for each issue you bring to the shop, especially if you are driving in a more remote area.

The Lower Write-Off Threshold for EVs A total loss means that the insurance company has to answer a claim with a payout that can recuperate the car being no longer operable. However, you could walk out of an EV collision with what feels like minor damages to the car, yet have to get your insurance company to write it off as a total loss. This is because how can the insurer verify battery safety for sure? This means that higher claim payouts may be forced more often, driving up the premium pool for everyone who drives or rents out an EV.

Factor 2: Heavy Chassis Dynamics & Amplified Collision Impact

Highway Physics

Did you know that electric vehicles are generally 20 to 30 percent heavier than their equivalent gas vehicle? Those lithium ion battery packs can get really heavy. Now, the way the kinetic energy transfer equation works means that a heavier car striking something will have more force than a lighter car. Collision on the highway? Often worse for the heavier car, if all else is equal and you’re only looking at the mass.

Secondary Damage Taken

So now you know that EVs have heavier weight. That extra weight can lead to other problems over time and in immediate collisions. The weight can cause structural deformation that leads to warping subframes, problematic bumper assemblies, suspension component issues, and more (especially in a car crash). Even if it is a relatively minor car crash speed-wise, these components could still break to your surprise, and your wallet’s dismay. Insurance companies that are on the hook for such damages also know that.

Heavy chassis

The chassis of a car is the skeletal framework of it. It structurally supports the rest of the vehicle and includes the frame, suspension system, and other key parts.

The heavy chassis weights cause faster tire degradation and suspension strain in EVs, which means that it is recommended to perform more maintenance. Maintenance is expensive while the risks are also higher.

Factor 3: Specialized Labor, Tooling & The Technician Bottleneck

Technician Requirements In order to fix a high voltage EV, technicians require industry certifications for safety and skill. They also require special safety gear, such as insulated gloves and de-energizing stations. Standard vehicle body shops also won’t have the diagnostic systems that are needed to diagnose issues with an EV.

Since the specialist technicians are few in number for EVs when compared to regular vehicles, EV technicians can charge much higher rates than traditional mechanics. Let’s say you face an issue with an EV while on the highway: if there is only one auto mechanic nearby who fixes EVs, they can charge significantly higher rates than traditional gas car mechanics, because they know you have limited options.

EV vehicles can be dangerous to repair if the technician only has traditional car knowledge. Essential credentials should be needed because not knowing how lithium ion batteries or structural frameworks of damaged EVs can be a safety problem.

Supply Chains The EV supply chain is a complex global thing. It involves everything from obtaining raw materials to refining and producing battery cells for the EV. Vehicles also need to be assembled. The market relies heavily on materials such as lithium, which is used for the batteries.

A lot of EV makers make it harder to access replacement body panels, sensor modules, structural parts, and more. This can lead to long repair delays. Proprietary parts like the ones for Tesla are, after all, a huge part of EV makers’ value. To obtain the needed parts, shops and owners need to go through online instructions to legally get them. Many components are restricted, which means that you cannot simply order them in the mail. You have to go through a specialized repair shop to get that part repaired or installed.

Staying up to date on the latest EV trends can help you make informed decisions about when to buy an electric vehicle and when locking in an EV insurance premium might be the best time for you.

Extended Rental Car Claims Rental car claims for EVs can also raise the overall rates of insurance companies. Look around: how many EV repair shops are there in your area? Now how many regular gas car repair shops are there? In most locations, EV repair shops are few in number. If you’re renting an EV to go on a business trip or a vacation, and something happens to the EV, the EV insurance has to take on all the repair or replacement costs: a huge problem while the rental car gets stalled in the shop cycle due to repair difficulties.

Longer shop cycle times often means that EV insurance companies must pay for weeks (or even months) of rental car coverage for policyholders, unfortunately increasing the final claim cost for insurance companies.

After assessing the numbers, to avoid losing money, EV insurance companies are obviously forced to raise their premiums.

Looking to the Future: Will the EV Penalty Ever Disappear?

It is likely that this so called penalty for EVs will disappear over time. However, it can take a while since these things can be unpredictable. In general, we can expect battery cell costs to drop slowly and gradually, leading to cheaper baseline replacement prices for EV battery problems.

Newer gen battery designs are also shifting, turning towards modular and repairable battery packs that let EV shops swap individual damaged modules instead of the whole battery pack. This will definitely make it cheaper because you don’t have to pay the cost for a whole battery pack replacement if only a part of the battery is broken.

As more mechanics complete high-voltage training, labor bottlenecks and shop rates will also begin to normalize. The supply of technicians who know how to maintain and repair EVs rises since more mechanics realize that EVs are becoming popular, and there is definitely a demand for more EV technicians.

How to Find Affordable EVs and EV Insurance

EV insurance generally costs anything from $260 to $340 a month. Some models are cheaper to insure, such as the budget EVs that focus on affordability anyway. On the other hand, any luxury or performance EV can cost thousands of dollars more a year to insure. If you are looking to own a legacy gas car maker’s EV model, it may also be cheaper to insure than an EV only luxury brand like Tesla or Rivian.

It is highly recommended to look for quotes when getting an EV. Check out your different options, and then check out the estimate repair and insurance costs for that specific brand of EV. You never know–the industry may have special premiums chosen specifically for that model.

As for EV insurance, generally auto insurance companies cover EVs as well. You don’t need a very special insurance policy to get your electric vehicle covered. However, EV insurance can be costlier, so compare different EV insurance quotes before settling for one.

Also look at the insurance policy details. For example, some EV insurance policies have extra features or add-ons, such as:

• Specialized EV roadside assistance
• Home charging coverage
• Portable cable and connector coverage
• EV parts protection

If they are valuable to you, then they may be worth the extra premium. On the other hand if you don’t care as much about these extras, then standard EV insurance may be enough.

Conclusion: Navigating the High-Cost Era of EV Insurance and Repairs

EV has a premium penalty for everyone who’s paying for repairs/replacement out of pocket or through insurance claims. EV insurance just tends to be higher across the board because of the greater risks that insurance companies take on when insuring an electric vehicles with battery packs.

At least it is good to know that this premium penalty is not totally arbitrary. The current repair shop economics, highway physics, and EV design landscape result in this greater risk for the pool of EV owners and insurers. Fortunately, as more technicians start becoming certified for EVs and diagnostics capacities become more widespread, at least the repair costs can start going down. EV designs are also shifting towards more modular components, which could make it less common to write small collisions off as forced total losses.

When buying a car, think about the total cost of ownership by factoring in your:

• EV insurance cost (check out the best auto insurance for more information)
• Fuel savings
• Repair and maintenance expectations

Until repairability becomes a widespread core design metric for EV manufacturers alongside range and acceleration, insurance premiums will remain a huge part of the hidden, long-term cost of EVs.