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Common challenges for all countries, impact on the popularization of electric vehicals

Thatcham Research, a British automotive risk intelligence company, recently stated that the lack of data on electric vehicle batteries continues to pose challenges for insurance companies, which are forced to scrap electric vehicles after minor accidents, which may affect the popularity of electric vehicles.

The company raised concerns about the lack of affordable or available repair solutions and post accident diagnosis in a report titled 'The Impact of Electric Vehicles on the Repair and Insurance Industry'.

In fact, a similar situation also occurs in China. How to reflect the public welfare of insurance, provide more comprehensive and detailed protection for car owners at a lower price, and ensure that insurance companies can make profits to maintain normal operations is a topic that the insurance industry must face.

The insurance industry in various countries is facing the problem of loss assessment for new energy vehicles

In recent years, the sales and ownership of new energy vehicles in China have grown rapidly, surpassing the overall market. From January to June 2023, the production and sales of new energy vehicles reached 3.788 million and 3.747 million, respectively, with a year-on-year increase of 42.4% and 44.1%, and a penetration rate of 28.3%.

According to data from the Ministry of Public Security, as of the end of June, the total number of new energy vehicles in China reached 16.2 million, accounting for 4.9% of the total number of vehicles. Among them, the total number of pure electric vehicles is 12.594 million, accounting for 77.8% of the total number of new energy vehicles.

While being accepted by the public due to its advantages, the after-sales maintenance and insurance issues of new energy vehicles also arise.

Some foreign insurance companies complain that many electric vehicles cannot be repaired or evaluated after an accident, even if it is only minor damage to the battery pack, which forces them to scrap low mileage cars, resulting in higher premiums and weakening the benefits of car electrification.

At the same time, batteries can account for half of the cost of electric vehicles, and Thatcham found that the cost of replacing batteries may exceed the second-hand price of the vehicle after a year, making battery replacement uneconomical.

Currently, only 1.65% of cars on UK roads are electric vehicles, but Thatcham stated that insurance claims related to electric vehicles are already 25.5% more expensive than gasoline vehicles, and repair times are also 14% longer.

According to data from Policygenius, an internet insurance brokerage in the United States, the average monthly premium for electric vehicles in the United States by 2023 is $206, 27% higher than that of internal combustion engine models. The American insurance company learned from the repair terminal that even if a small accident causes partial damage to the battery pack, the entire battery pack must be replaced, and the cost may exceed $15000.

In China, the same situation is happening. The premium for electric vehicles has long been higher than that for gasoline vehicles, and even insurance companies are unwilling to underwrite electric vehicles.

According to statistics from China Banking, Insurance and Credit Insurance Corporation, in 2021, the average premium per unit for new energy vehicle insurance was about 21% higher than that of traditional fuel vehicles, but overall, the frequency of accidents and the average compensation per case were higher than those of traditional fuel vehicles.


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