Insurers Writing off Electric Vehicles over Minor Damage: Climate Benefits of Electric Vehicles Undermined
Insurers are being pushed into writing off numerous electric vehicles with only minor damage to battery packs, forcing the batteries to be sent to scrap yards and undermining the climate benefits of going electric.
Battery packs cover roughly half the cost of an electric vehicle, sometimes costing tens of thousands of dollars, often making it more economical for insurers to consider junking the car rather than replacing the battery pack, according to Reuters.
The trend has emerged as an unanticipated downside to the rapid transition towards electric vehicles, which have been widely acknowledged for their environmental benefits and potential to reduce dependence on fossil fuels.
The insurance industry's management of these cases has raised eyebrows among consumer advocates, who argue the practice has been unfairly penalizing EV owners.
Electric vehicle and battery production are both expected to rise dramatically by 2026, with more than $120 billion invested, according to the Environmental Defense Fund.
While the preliminary purchase price of an EV may be higher than that of a comparable petrol or diesel-powered vehicle, lower fuel and maintenance costs have often been highlighted as advantages to help offset the higher upfront cost.
Many have called for insurance firms to update their policies to better accommodate the unique issues associated with electric vehicle ownership, including offering specialized coverage options for battery pack replacements.
Without access to diagnostic data, it is likely that insurance costs will climb as more electric vehicles are sold and low-mileage cars are scrapped.
The rising cost of insuring EVs has become a source of worry for EV owners, with some insurers refusing to insure certain brands due to uncertainty around repair costs.
The price of replacing an EV's battery pack can be expensive, often ranging from $20,000 and up, depending on the make and model.
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