Electric vehicle (EV) owners in the UK are being hit with insurance premiums that are twice as high as those for combustion-engine vehicles, posing another obstacle to the widespread adoption of zero-emission cars. According to the Howden Group Holdings Ltd, an insurance broker, the average premium for insuring an EV reached £1,344 ($1,700) at the end of last year, which is double the cost of cover for conventional cars. The high costs are attributed to factors such as increased repair expenses, longer time spent in workshops, and a scarcity of mechanics qualified to repair EV batteries.
The rising insurance costs for EVs, which are already generally pricier than their petrol or diesel counterparts, is a setback for an industry that is already showing signs of slowdown. Last week, Tesla Inc. reduced the prices of its popular Model Y in various markets, including Germany, France, and Norway. Similarly, Audi announced in December that it was scaling back its EV rollout. Across Europe, including the UK, potential buyers are finding themselves faced with a cost-of-living crisis and a lack of progress in expanding charging infrastructure.
The cost of insuring EVs has been increasing at a faster rate than that of traditional vehicles, with premiums rising by 50% last year alone. The insurance industry has contended that it is not profiteering, but rather that premiums are determined based on the cost and frequency of claims. Howden reports that accidental damage claims for EVs are, on average, 35% more expensive than similar claims for combustion-engine vehicles.
This surge in insurance costs aligns with a recent stall in the growth of EV market share in the UK, suggesting a decline in demand for electric vehicles. This combination of factors poses challenges for the wider adoption of EVs, hindering progress towards decarbonizing transportation and addressing climate change concerns.