Rising EV Repair Claims Amid Continued Higher Costs Compared to ICE Vehicles

    Electric Vehicle Repair Costs Outpace ICE Vehicles, but Changes on the Horizon

    In recent years, the popularity of electric vehicles (EVs) has surged, driven by advancements in technology, environmental concerns, and government incentives. However, one area where EVs still face challenges is in collision repair costs. According to Mitchell International, a leading provider of technology, connectivity, and information solutions to the property and casualty claims and collision repair industries, repair expenses for EVs continue to surpass those of vehicles with internal combustion engines (ICE). The gap in repair costs is significant, with a difference of $950 in the United States and $1,301 in Canada.

    During the third quarter, the frequency of EV repairable claims in the United States saw a 1.86% increase, representing a 0.37% rise compared to the previous quarter. This upward trend indicates the growing need for efficient and affordable repair solutions for EVs.

    Ryan Mandell, Director of Claims Performance at Mitchell, suggests that the repair-cost disparity between EVs and ICE vehicles will eventually narrow as the aftermarket and recycled parts sectors expand to accommodate EVs. Additionally, automakers are expected to make efforts to streamline the collision repair process for EVs, making it more accessible and cost-effective. Mandell points out how Tesla’s Giga Casting system, which enables the production of large vehicle parts as one unit, highlights some of the challenges in repairing EVs. While this manufacturing process has been embraced by Tesla and more recently by automakers like Toyota, the need to replace entire parts rather than repairing specific portions can significantly impact repair costs.

    While market forces and economies of scale may contribute to the eventual reduction of the repair-cost gap between EVs and ICE vehicles, Mandell believes that it will never completely disappear. One major factor contributing to the continued disparity is the cost associated with managing and storing high-voltage batteries during the repair process. These unique requirements make the repair of EVs, such as the electric F-150 Lightning, more expensive compared to their ICE counterparts, even for similar trim packages.

    Dispelling a common misconception, Mitchell’s data contradicts claims that EVs are written off as total losses more frequently than ICE vehicles. Mandell emphasizes that when comparing EVs to 2020 and newer luxury vehicles, which offer a comparable actual cash value, the total loss numbers are nearly identical. The data from the first three quarters of 2023 reveals that EVs had a total loss rate of 7.25%, while luxury ICE vehicles had a rate of 7.47%. Moreover, the total loss rate for all ICE vehicles during the same period was 8.49%. Mandell clarifies that although there may be instances where an EV is deemed a total loss due to compromised battery integrity, it does not significantly impact the overall total loss figures.

    In conclusion, while EV repair costs currently exceed those of ICE vehicles, changes in the industry are expected to narrow the gap. As the aftermarket and recycled parts sectors expand, and automakers work towards simplifying the repair process, the financial burden associated with EV collision repair should decrease. Furthermore, the myth that EVs are more frequently declared as total losses has been debunked by Mitchell’s data. As the EV market continues to evolve, it is crucial for manufacturers to prioritize a positive collision repair experience to enhance overall brand perception. With advancements in technology and a shift towards more sustainable transportation, the repair-cost disparity between EVs and ICE vehicles may eventually become a thing of the past.

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