ARE EVs THE FUTURE OF THE TRADE?
Article by David Sweeney Senior Operations Manager The Taxi Insurer
www.taxiinsurer.co.uk
According to recent data, England’s taxi and PHV drivers are showing a significant take-up of more environmentally friendly fuel options. Although petrol and diesel vehicles made up 77% of the taxi fleet and 53% of the PHV fleet at the end of March 2023, hybrid vehicles accounted for 22% of taxis and 40% of PHVs, while fully EVs represented 0.8% and 6.4% of their respective fleets.
In London, there are now more electrified LEVC TX taxis than diesel TX4s, according to the manufacturer. More than 40% of official black cabs are the TX model, with over 6,000 operating in the capital.
OBSTACLES TO EV TAKE-UP
However, drivers wishing to trade in their traditionally powered model for an electric option face several obstacles. First, brand new EVs are significantly more expensive to buy than petrol or diesel alternatives; the TX retails at more than £55,000, compared to around £35,000 for fossil fuel-driven vehicles.
Second, insurers in general, but particularly taxi insurers, are only just coming round to the idea that they will have to insure fully EVs. Hybrid models have been available for a longer period of time and are more established but, up until this year, there was a good percentage of taxi insurers who wouldn’t cover EVs, leaving the customer with fewer options.
This has meant that EVs cost, on average, double the price of a traditional vehicle to insure. At The Taxi Insurer, we have certain Tesla customers, some of whom are experienced drivers with many years of no claims bonus, who are paying twice as much in taxi insurance as they would be for a hybrid vehicle.
A third factor is higher repair charges. The cost of replacement parts for EVs is substantially higher than for traditionally fuelled vehicles, because EVs can’t be taken to any repair shop. They’ve got to go to a specialist and, on many occasions, even back to the main dealer, so labour costs are more considerable.
When insurance companies set up their approved repairer networks in their contracts, they establish an agreed hourly rate. This is often a reduced rate
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compared to what the customer would pay, because the repairer is guaranteed a certain amount of work over the year from each insurer. But with EVs, insurers have far fewer repair options to choose from and can’t offer those repairers the same number of vehicles to work on.
In addition, there can be major delays, often running into several months, in obtaining EV parts following an accident, with dealer networks unable to even confirm delivery dates for some components. Ultimately, delays in repair time mean higher claims costs, especially in a non-fault incident where the customer is given a hire car.
KNOCK-ON EFFECT OF HIGHER EV COSTS
When the cost of EV claims soars, every motorist is affected as insurance premiums are driven up across the board. Insurance effectively works on the principle that all premiums are placed in a pot and claims costs are paid from that pot. If costs outweigh the amount paid into the pot then premiums are increased.
THE CHARGING CONUNDRUM
The final piece of the jigsaw – the EV charging network - remains a major issue. While the number of charging points needs to be increased, positioning them in the optimum locations is just as important. In London the most common areas in which cabbies live in the capital are Tower Hamlets, Newham, Brent, Redbridge and Greenwich; but the boroughs with the most chargers are Westminster, Kensington & Chelsea, Hammersmith and Fulham, Wandsworth and Richmond.
Of course, if they’re lucky enough to find a charger during the working day, drivers are then losing both time and income while their vehicle is being replenished.
A BRIGHTER FUTURE?
Will the lot of the EV driver improve as time goes on? We expect it to, as the government has committed to all new cars and vans sold in the UK being zero- emission by 2035. This means that the traditional motor mechanic will have to become more specialist and learn to respond to market forces and demands.
We should also point out that the majority of the insurers we use for taxi insurance are happy to accept fully EVs and we continue working closely with them in order to make premiums as affordable as possible. So, if the current situation remains challenging for EV cabbies, the long-term outlook is positive.
NOVEMBER 2023 PHTM
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