Yes, in general they are, and it’s only likely to get worse in the medium term.
Electric cars, partly because of the costs associated with their batteries, and equally because those batteries can only be serviced or repaired by expensive specialist technicians, come with higher insurance loadings. According to the German Insurance Association (the GDV, or Gesamtverband der Versicherer): “The repair costs of electric cars are much higher. On average, they are 30 to 35 per cent higher than those of comparable cars with combustion engines.”
Equally, a recent survey by US industry analysts Mitchell found that electric car repairs were, on average, about 20 per cent higher than those for internal combustion engine cars. Plug-in hybrids cost, on average, 12.5 per cent more. Much of the extra cost was down to EVs needing more labour hours per repair.
And you’re saying it will get worse? Why?
In an effort to streamline production and also to make the structures of electric cars lighter (better for efficiency) carmakers are turning to so-called “gigacasting” techniques.
What on earth is gigacasting? Sounds like something from Back to the Future.
This means making cars with fewer bits, thus making themf much more affordable and efficient to build. That leads not only to potentially more affordable electric models, but also cars that don’t need as much energy in their construction phase, dramatically cutting their carbon footprint.
Toyota, for example, has developed a new way of building the basic structure of its cars. This so-called Gigapress cuts the number of individual parts and processes needed to make a car. It involves pouring molten aluminium into a mould that, when set, forms the front, rear, or centre structure of the car. The individual sections can then be adjusted for size depending on which car is being made at which factory on a given day.
In existing processes, according to Toyota, making one of these sections uses about 86 parts, 33 separate production processes and takes many hours. The new Gigapress apparently can do the same job in about three minutes.
While Toyota is generally credited with revolutionising car production in the 1970s and 1980s with its famed “kaizen” system of continuous improvement, this time around the Japanese company openly says that it’s taking inspiration from another company – Tesla.
Working with Italian company Idra Press, Tesla has designed its own Gigapress, which can in theory make the lower structure of cars such as the Model 3 and Model Y incredibly quickly – Tesla already claims to be able to make a Model Y from start to finish in 10 hours, potentially three times as fast as rival products. For other carmakers, the Gigapress process becomes a little more complicated, as it has to allow for multiple models of differing heights, lengths, widths and weights. VW apparently considered a Gigapress process for its next-generation of EVs, but rejected the idea – for reasons still unknown but then Tesla has itself recently pulled back from plans to gigacast the entire under-structure of the car, suggesting that there is a meeting point in the graph between cost reductions and manufacturing investment in the technology.
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Sounds exciting, but what does this mean for the average EV driver?
A cheaper purchase price, if all of the gigapress and gigacasting techniques actually lead to savings, is going to be welcome, but what about insurance prices?
The maths on this is pretty basic. Current vehicle designs, if damaged, can to an extent be picked apart piece by piece, and those individual pieces can be repaired or replaced. While Irish insurers tend to base their quotes much more on the age and experience of the driver, the cost of repairing damaged vehicles is an overarching pressure on the cost of insurance.
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In the case of a gigacasted vehicle, that cost of repair could be exponentially higher. Already, the fact that a lightly damaged battery pack means, more or less, an instant write-off is bad enough. Combine that with the potential for replacing a huge section of gigacasting, or worse the entire lower structure of the car – because it’s now all one big section of steel and aluminium – and the costs spiral ever higher.
The GDV admits that “in motor vehicle liability insurance – ie, accidents in which one car causes damage to others – electric cars cause 5 to 10 per cent fewer accidents on average than comparable combustion engines”, but gigacasting could still see insurance premiums rise again.
“We have more than 125 years of experience with combustion engines, but only around 10 years with modern electric vehicles” said Christoph Lauterwasser, managing director of the Allianz Technology Centre. “Garages, towing companies, fire departments and experts therefore still lack experience and best practice in dealing with severely damaged electric cars. In view of the anticipated growth, there is therefore a clear need for action.”
