Low-mileage electric cars are being written off by insurers after even minor accidents due to the cost of repairing or assessing damaged battery packs, resulting in high insurance premiums and piling up waste in vehicle recycling yards, according to a Reuters report today.
Matthew Avery, research director at automotive risk intelligence company Thatcham Research, said:
“We’re buying electric cars for sustainability reasons.” He added: “But an EV isn’t very sustainable if you’ve got to throw the battery away after a minor collision.”
For many of these cars, repairing or replacing the battery packs can be uneconomical, as battery packs can cost tens of thousands of dollars and make up to 50% of an EV’s price.
Insurers and industry experts warn that unless battery packs become more easily repairable and battery cell data more accessible, the trend of low-mileage, zero-emission cars being written off after minor accidents will continue to grow, leading to higher insurance premiums and environmental waste.
Christoph Lauterwasser, managing director of the Allianz Center for Technology, a research institute owned by Allianz (ALVG.DE), said:
“The number of cases is going to increase, so the handling of batteries is a crucial point.”
Battery packs from a range of car manufacturers are piling up in recycling yards in some countries, leading to concerns about the environmental impact of electric cars.
While EVs are often bought for sustainability reasons, they risk losing their environmental advantage if they are written off after only a few miles due to the cost of repairing or replacing the battery packs. While access to battery data and repairability is a concern, so is the fact that the production of EV batteries emits far more CO2 than fossil fuel models. EVs must be driven for thousands of miles before they offset those extra emissions, making it all the more important to ensure that battery packs are easily repairable and do not add to the growing waste problem in recycling yards.
“If you throw away the vehicle at an early stage, you’ve lost pretty much all advantage in terms of CO2 emissions.”
Most carmakers claim that their battery packs are repairable, although few seem willing to share access to battery data. Insurers, leasing companies, and car repair shops are already in a fight with carmakers in the EU over access to connected-car data, including battery data. For instance, Allianz has seen battery packs with scratched exteriors where the cells inside are likely undamaged, but without diagnostic data, it has had to write off those vehicles.
EV battery problems also expose a hole in the green “circular economy” touted by carmakers. For instance, at SYNETIQ, the UK’s largest salvage company, head of operations Michael Hill said over the last 12 months, the number of EVs in the isolation bay – where they must be checked to avoid fire risk – at the firm’s Doncaster yard has soared, from perhaps a dozen every three days to up to 20 per day.
Hill said: “We’ve seen a really big shift, and it’s across all manufacturers.”
The UK currently has no EV battery recycling facilities, so SYNETIQ has to remove the batteries from written-off cars and store them in containers. Hill estimated at least 95% of the cells in the hundreds of EV battery packs – and thousands of hybrid battery packs – SYNETIQ has stored at Doncaster are undamaged and should be reused.
The British government is funding research into EV insurance “pain points” led by Thatcham, Synetiq and insurer LV=.