Lack of Data on EV Batteries Complicates Insurance Claims

A lack of data on electric vehicle (EV) batteries continues to challenge insurers forced to scrap EVs after mild accidents, potentially undermining the growth of a zero-emission car market. Thatcham Research said on Wednesday that a replacement battery could cost up to half the price of an entire car, making it uneconomical for insurers to repair EVs unless they have access to information on their state of health after a collision.

Most carmakers have said their battery packs are easily repairable but have yet to share third-party access to the vital data needed for this work. According to analysts, this is causing the number of low-mileage, zero-emission cars being scrapped after minor damage to pile up in junkyards. Experts warn that insurance premiums will continue to rise unless carmakers and third parties can work together to make EVs more affordable to repair.

EVs generate no emissions during operation, but they do produce carbon dioxide when they are produced. The UK Government’s innovation agency Innovate UK said in a report that the EV manufacturing industry must “take urgent steps to reduce these CO2 emissions”.

However, a key component of EV production – lithium – is scarce and in short supply, pushing up the vehicles’ prices. The price hikes are also feeding through to consumers, who had already been paying a premium for their greener cars.

A shortage of raw materials has created a mad dash by car companies to secure supplies while governments attempt to speed up the permitting process for new mining projects. The rush could lead to a spike in the price of batteries, further undermining EVs’ profitability and slow progress towards President Barack Obama’s goal of electric cars accounting for 50 percent of car sales by 2030.

In the near term, some automakers have earmarked alternatives to lithium to cut their reliance on the material and drive down costs. But those alternatives take time to develop and may require trade-offs in performance. Meanwhile, the price of lithium and other critical raw materials is expected to continue to rise as the demand for EVs accelerates, further adding to car makers’ production costs.

Matthew Avery, research director at Thatcham Research, said: “EVs are a great way to save on fuel and lower emissions, but the inability to repair them if damaged means some owners will be forced to write theirs off. That will hit sales and stall a global shift to zero-emission vehicles.”

The UK-based company conducts research and testing for car safety and security systems, provides training and apprentices, and offers a range of technical repair methods. Working from a fully-equipped and ultra-modern Repair Technology Centre, Thatcham Research also conducts crash tests for all the country’s leading manufacturers of passenger and commercial vehicles.

The firm’s work is widely recognized and respected worldwide, providing a valuable service to the global automotive repair and insurance industries. It is a member of the Global Automotive Manufacturers Association and is accredited by Euro NCAP to carry out vehicle crash testing.

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