Slightly damaged battery packs after accidents are forcing insurance companies to write off EV’s
Reuters recently shared this very interesting article about rising insurance premiums for electric vehicles and how the recycling of electric car batteries is not going on as much as promised by the European Union and North America.
For many electric vehicles, there is no way to repair or assess even slightly damaged battery packs after accidents, forcing insurance companies to write off cars with few miles – leading to higher premiums and undercutting gains from going electric.
And now those battery packs are piling up in scrapyards in some countries, a previously unreported and expensive gap in what was supposed to be a “circular economy.”
“We’re buying electric cars for sustainability reasons,” said Matthew Avery, research director at automotive risk intelligence company Thatcham Research. “But an EV isn’t very sustainable if you’ve got to throw the battery away after a minor collision.”
Battery packs can cost tens of thousands of dollars and represent up to 50% of an EV’s price tag, often making it uneconomical to replace them.
While some automakers like Ford Motor Co (F.N) and General Motors Co (GM.N) said they have made battery packs easier to repair, Tesla Inc (TSLA.O) has taken the opposite tack with its Texas-built Model Y, whose new structural battery pack has been described by experts as having “zero repairability.”
in January CEO Elon Musk said premiums from third-party insurance companies “in some cases were unreasonably high.”
Unless Tesla and other carmakers produce more easily repairable battery packs and provide third-party access to battery cell data, already-high insurance premiums will keep rising as EV sales grow and more low-mileage cars get scrapped after collisions, insurers and industry experts said.
“The number of cases is going to increase, so the handling of batteries is a crucial point,” said Christoph Lauterwasser, managing director of the Allianz Center for Technology, a research institute owned by Allianz (ALVG.DE).
Lauterwasser noted EV battery production emits far more CO2 than fossil-fuel models, meaning EVs must be driven for thousands of miles before they offset those extra emissions.
“If you throw away the vehicle at an early stage, you’ve lost pretty much all advantage in terms of CO2 emissions,” he said.
Most carmakers said their battery packs are repairable, though few seem willing to share access to battery data. Insurers, leasing companies and car repair shops are already fighting with carmakers in the EU over access to lucrative connected-car data.
Lauterwasser said access to EV battery data is part of that fight. Allianz has seen scratched battery packs where the cells inside are likely undamaged, but without diagnostic data it has to write off those vehicles.
Additionally, Ford and GM tout their newer, more repairable packs. But the new, large 4680 cells in the Model Y made at Tesla’s Austin, Texas, plant, are glued into a pack that forms part of the car’s structure and cannot be easily removed or replaced, experts said.
In January, Tesla’s Musk said the carmaker has been making design and software changes to its vehicles to lower repair costs and insurance premiums.
The company also offers its own insurance product in a dozen U.S. states to Tesla owners at lower rates.
Insurers and industry experts also note that EVs, because they are loaded with all the latest safety features, so far have had fewer accidents than traditional cars.
Meanwhile, Sandy Munro, head of Michigan-based Munro & Associates, which tears down vehicles and advises automakers on how to improve them, said the Model Y battery pack has “zero repair-ability.”
“A Tesla structural battery pack is going straight to the grinder,” Munro said.
