Insurers Pushing Unjustified Repair Costs for EVs: A Call for Car Companies to Intervene.
In June, a Hyundai Kona faced insurance complexities after a minor collision in Cheltenham, England. Despite appearing operational, damage to the battery casing led to insurance hesitations. A previous repair attempt exacerbated the situation. Matt Cleevely, owner of Cleevely Motors, took charge of the intricate repair. Upon inspection, the damage was minor, challenging assumptions about the need for extensive repairs.
“They’d suffered very minor physical damage that neither compromised the integrity of the battery casing, nor was dangerous in any way,” says Cleevely. “I just found it massively over the top.”
He proceeded with the casing replacement as per the insurance company’s request, incurring a cost of £600 ($745), plus tax. Over the last three years, the UK has witnessed a surge in electric cars on the road, reaching an estimated 850,000, as reported by the RAC. Meanwhile, the US anticipates a potential record of over 1 million EVs sold this year.i
With the increasing presence of electric vehicles on the roads, the likelihood of them being involved in accidents rises. However, concerns often arise regarding damaged batteries, potentially jeopardizing vehicle safety with fears of electric shocks, fires, or explosions. It’s essential to note that such incidents are exceedingly rare and less frequent than in traditional internal combustion engine vehicles.
“In some instances, insurers are deeming entire vehicles as total losses due to minor physical damage to battery casings. Sources within the industry suggest a shortage of auto repair shops proficient in accurately assessing and repairing electric vehicle (EV) batteries. According to Cleevely, owner of Cleevely Motors, there is an undue amount of fear-mongering in the industry regarding EVs, stemming from a lack of understanding.
Complicating matters, some manufacturers make repairs challenging for mechanics. Obtaining parts can be problematic, and there is often a lack of official information on repairing specific EV battery units. Consequently, these units might be replaced at a staggering cost, exceeding £10,000 ($12,430) for certain models.
“If you’re replacing a damaged battery with a new one, suddenly, once you’ve added in the other costs in terms of labor and hire cars,” says Mark Fry, an engineering manager at Thatcham Research, “it’s just not always economical to repair the car.”
Right to Repair
The Association for British Insurers acknowledges challenges related to the availability of repairers in the UK. The electric vehicle (EV) insurance market appears somewhat uncertain, with major British retailer John Lewis discontinuing EV insurance in September. This decision followed the withdrawal of cover for EVs by its underwriter, Covéa. Despite inquiries, Covéa has not provided clarification on the reasons behind this change in direction.
Tim Zawacki, an analyst at S&P Global Market Intelligence, highlights that some US-based insurance firms exclude electric vehicles (EVs), citing a lack of real-world experience. Additionally, a spokeswoman for Admiral, a major UK insurer, notes that battery-related issues can lead to write-offs due to the high value of EV batteries. Christoph Lauterwasser from the Allianz Center for Technology suggests that damage to the underside of an EV can result in scratched battery casings, leading to expensive total replacements.
Despite electric vehicle (EV) claims constituting only 2 percent of total automobile-related claims at Allianz, they contribute to 10 percent of the company’s costs. In Western markets, EVs often contain a higher proportion of difficult-to-repair materials like aluminum or composites, leading to increased replacement needs in collision repairs. Ryan Mandell, Director of Claims Performance for Mitchell, emphasizes the lack of established repair procedures and the associated insurance costs for EVs compared to internal combustion engine (ICE) vehicles. However, Mandell notes that the frequency of total EV write-offs is not currently surpassing that of comparable high-end ICE vehicles.
“We need clear instructions from the vehicle manufacturers in their repair manuals to say what kind of damage is permissible,” says Lauterwasser.
“We require explicit guidance from vehicle manufacturers in their repair manuals, outlining acceptable levels of damage,” emphasizes Lauterwasser.
Small Numbers, Big Cost
Presently, there seems to be an abundance of caution. Modern EVs activate a component called the pyro fuse upon detecting a collision, disconnecting the battery. In severe collisions, airbags may deploy. Lauterwasser highlights that some manufacturers insist on battery replacement regardless of its actual condition, even if replacing the pyro fuse and damaged parts could make the car operable. Implementing simple design changes, such as additional protective shielding or allowing minor scratches, could eliminate significant costs associated with EV repairs.
“Some EVs possess idiosyncrasies that aren’t universally known among engineers,” notes Eliot Smith, the founder of Pro-Moto Europe, a company specializing in training mechanics for vehicle repairs. He cites an older EV model that tended to cease drawing power from its battery after several years.
“A small component failure would occur, preventing the battery from switching on,” he explains. However, Smith and his colleagues discovered that replacing this component could revive the car. “It’s a 45p or £1.25 [$1.55] component.” At that time, it wasn’t a component supplied by the manufacturer, and the mechanics had to procure it from an alternative source.
Part Problems
Smith contends that manufacturers are currently somewhat reluctant to release part numbers or provide replacement parts for battery systems, which is understandable as they aim to expand their market share. (Smith, having previously worked for a major carmaker, understands this dynamic.) However, mechanics require access to these parts to acquire the expertise needed to repair EVs involved in accidents.
“We provide them with the skills; they just need the components,” says Smith. He offers a different example: With certain EVs, it’s not feasible to simply swap out individual damaged modules from within a battery. Some cars necessitate reprogramming to accept the new module because they won’t recognize it otherwise—a process analogous to administering immune-suppressing drugs to an organ transplant patient.
Even in instances where batteries have been exposed to water, Smith asserts that it should be feasible to dry them out, conduct tests, and reintegrate them into operational status. Recently, he assisted a repairer in accomplishing this. The labor cost amounted to approximately £1,000 ($1,243)—significantly less than the £12,000 (nearly $15,000) demanded by the carmaker for a brand-new battery.
Wired reached out to multiple car manufacturers for comments on this story, but many did not respond. Cleevely highlighted the elevated cost of replacement parts for Tesla vehicles compared to other brands, and Tesla did not provide a response to their inquiry.
Second Life for Batteries
Good batteries deemed unfit for the road by insurers or car manufacturers find new life in Dorset, England. Second Life EV Batteries acquires discarded packs, selling them to hobbyists and makers for applications like solar panel electricity storage or, as founder Paul Chaundy notes, even in light aircraft in France. Chaundy criticizes the removal of perfectly functional batteries from premium vehicles, mentioning a battery arriving with only 2,000 miles on the day of the conversation.
Despite the controversy surrounding the removal of functional EV batteries, it benefits businesses like Second Life EV Batteries. In the coming years, they plan to introduce a consumer-friendly energy storage device utilizing second-hand EV batteries. With a growing surplus of these batteries, the company finds that many are in excellent condition, providing ample options for their projects.
