Electric Cars and Insurance: Challenges Arising from Battery Damage

Electric cars offer numerous advantages over their combustion engine counterparts, but they also come with their own set of drawbacks. One significant concern is that electric cars are more likely to be declared total losses by insurers, even in minor accidents, and the culprit behind this is often the vehicle’s battery.

According to RACE (Royal Automobile Club of Spain), a car is deemed a total loss when an accident, fire, or theft occurs, and the insurance company’s expert determines that the cost of repairing the damage exceeds the car’s market value or its value at the time of the incident. Unfortunately, electric cars tend to fall into this category more easily.

car collision

Battery-Related Challenges

In many electric vehicles, it is virtually impossible to repair slightly damaged battery packs following accidents. Consequently, insurance companies are compelled to assess cars with low mileage as total losses, ultimately leading to their disposal. This situation has resulted in a growing accumulation of battery packs in scrapyards in some countries, undermining the concept of a “circular economy.”

Matthew Avery, research director at Thatcham Research, an automotive risk intelligence firm, highlights the paradox: “We are buying electric cars for sustainability reasons. But an electric vehicle is not very sustainable if you have to throw away the battery after a minor collision.”

Furthermore, data from certain insurers suggest that electric cars experience higher accident rates. AXA, for instance, reports that drivers of electric cars have 50% more accidents resulting in damage to their vehicles compared to those with combustion engines.

Car Accident Claim Damage

The Overtapping Effect

One contributing factor to these higher accident rates is the “overtapping effect.” Electric cars often feature more powerful acceleration, with some models boasting over 200, 300, or even 400 horsepower. Drivers unaccustomed to managing such intense acceleration can find themselves inadvertently involved in accidents. The issue is more related to acceleration capacity than braking, as electric vehicles often have a single-speed automatic gearbox responsible for managing power.

Costly Battery Replacements

Replacing an electric car’s battery pack can be prohibitively expensive, sometimes exceeding the value of the entire vehicle. A noteworthy example comes from China, where a Polestar 2 driver damaged both the battery pack and a protective aluminum sheet in an accident. The repair estimate reached a staggering 540,000 yuan (approximately 71,630 euros), surpassing the cost of a brand-new car of the same model, which was priced at 338,000 yuan (around 44,835 euros).

The cost of battery replacement varies significantly depending on the car’s brand. Some manufacturers offer the option to replace specific battery modules, reducing costs substantially. Renault, for instance, charges approximately 2,700 euros per unit for battery module replacements, while a complete battery replacement can cost around 14,000 euros.

These challenges underscore the complexities and potential financial implications associated with insuring and repairing electric cars, particularly when it comes to battery-related issues.