Feature
Above: If an EV’s battery is damaged, it often leads to an insurance write-off due to high replacement costs - which average £18,160, according to Thatcham.
than headline figures. One source told us that most insurance companies do not make a profit on motor fleet policies, irrespective of what powers the vehicles. Equally, fleets are largely responsible for the growth in EVs, which means their insurers are more exposed to them. “Seventy to eighty per cent of EVs are going into company car and salary sacrifice schemes,” explains Jon Dye, director of underwriting for motor at QBE, “so commercial insurers are seeing the transition quicker than in the retail market.” “Insurers are trying to underwrite a very immature product in an immature market,” adds Dave Parry, commercial director at accident management specialist FMG, “it’s gone from being niche to mainstream overnight. “EVs are still a relatively small proportion of the repairs the industry sees… in the fleet sector this year, about 30% of all our repairs will be BEVs. Five years ago, it was 3%.”
Insurers like clear historical data and they have that with petrol and diesel cars. EVs may have mushroomed in fleet but they have not been around for long enough to generate the same demonstrable risk profile. As one source told us, “The cultures of the traditional insurers are that they don’t like change – they’ve never liked change, and even when there is change, they only find comfort if they’ve got historic data.” Then there is the cost and technology of the vehicles. Put simply, they are more advanced, so the components are pricier – and not just the powertrains.
Parry continues: “We’ve got a lot more carbon now and a lot more plastics to try and balance the weight distribution of the vehicle, because the batteries are so heavy.”
“I’m stressing the point to make one, but 20 years ago, you’d have a hammer and a dolly to knock out damage. Those days are long gone, because there’s lots of composite material now. We might need three different welders on one
repair, because there might be some aluminium, and you might need plastic welders. More skills are required because more methods are required.” Those skills are not exactly in abundance, either, which adds to the time and expense of getting EVs through workshops. In August, the Institute of the Motor Industry said there were 58,800 technicians qualified to work on EVs, representing 24% of the workforce. Based on the forecast increase in EVs on UK roads, the organisation predicted a shortfall of 3,000 technicians by 2031 and 16,000 by 2035.
“Pre-Covid… the average
VOR (vehicle-off-road time) would probably be about eight or nine days. Since Covid, you could pretty much double those for ICE vehicles and EVs are probably at least 30 days.”
Any accident in which an EV’s battery is damaged is highly likely to result in an insurance write-off on cost and safety grounds. Thatcham’s report claimed the average price of a replacement battery was £18,160, which was enough to outweigh the average used vehicle value by the time a car was a year old (£16,943, according to the report). That excludes the average cost of the repair itself, which was said to range from £1,553 to £563 for a one-to-five-year-old car, a flat £1,800 for hire costs to cover VOR time, and a flat £500 for “extra cost[s] associated with BEV”.
Battery packs are typically located at the bottom of the car, rendering them vulnerable to a clout from below (think speedbump or a steep-angled car park entrance) and, even if the powertrain survives an incident unscathed, there are circumstances in which it could still be nulled and voided.
“Subject to certain scenarios – often it’s things like the airbags being triggered – the vehicle will trigger pyro fuses, which… sever the connections to the battery,” explains Dye, “that means the vehicle’s safe in protecting the occupants or people trying to rescue them. That’s great from a safety perspective, but you can’t replace the pyro fuses. You have to replace the whole battery.” We are keen to avoid the culture wars rhetoric about EVs catching fire and would remind those who subscribe to it that petrol is flammable. The chemical make-up of a damaged battery can lead to combustion if an oxygen pocket forms within it and the materials transition between charging and discharging, while the flames are notoriously difficult to put out – but that does not mean EVs are fire traps on wheels. Citing its own insurance records, salary sacrifice firm Tusker – which has a fleet of more than 30,000 EVs – reported in February that none of them had caught fire. Nonetheless, the fear of a damaged battery combusting is yet another big reason why risk- averse insurers do not pass go and head directly to write-off.
“By default, the insurers are saying, ‘we just don’t want to support a repair here,’” says Robin Brundle, co-founder and director of battery recycling specialist Recyclus Group, “unless it’s done back to manufacturer specification, then we’ve got ongoing liability issues that could do harm to humans, and nobody wants that. I think that’s really the crux of it, and why they’re being ultra-diligent.”
Yet another consideration is the erosion of the end-of-life value insurers derive from vehicle
www.businesscar.co.uk | September/October 2024 | 29
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57
