Soaring repair costs for EV batteries leading to potential insurance rate increases
In the rapidly evolving world of electric vehicles (EVs), the need for a robust battery repair and refurbishment industry is becoming increasingly apparent. As EVs age and become more common, the industry faces a significant risk: if it does not develop the skills to repair and refurbish batteries, write-offs may become more frequent as EVs depreciate.
The goal of this emerging industry is to maintain parity with internal combustion engine (ICE) vehicles. Just as independent repairers handle engine replacements, they are advocating for the same role in battery repair and refurbishment. This approach could help reduce the costs associated with EV repairs, making them more affordable for consumers and helping to keep insurance premiums in check.
Thatcham Research, a leading research organisation focused on the insurance industry, is emphasising the importance of this development. According to Dan Harrowell, principal engineer of advanced technologies at Thatcham Research, a damaged battery in an EV can be worth up to 55% of the value of a new EV. This high value, combined with the current 2% of EV repairs involving battery damage, means that some electric vehicles with damaged batteries are being written off due to their high repair costs.
This situation raises concerns about 'betterment' in the industry. Replacing a damaged battery with a new one may result in the car being worth more than it was before the accident, potentially putting policy holders in a better position than before their accident. Insurers are understandably concerned about this issue.
To address these challenges, companies like G.A.S. and BMZ are collaborating strategically in the UK to develop battery repair and restoration solutions. The focus of this industry is on maintaining the value of electric vehicles and ensuring that they can be repaired and returned to the road safely and cost-effectively.
Thatcham Research is advocating for the development of a battery repair and refurbishment industry in the UK. As the number of EVs in the country continues to grow, the need for such an industry becomes increasingly crucial for keeping the costs of insurance claims down. The organisation is specifically focused on the repair, refurbishment, and remanufacture of EV batteries, with the ultimate goal of helping keep the costs of insurance claims manageable and ensuring the continued growth and success of the EV market in the UK.
