The world is entering the era of electric vehicles, but now users of new energy vehicles are paying 15-20% higher insurance premiums than traditional cars.
Wenwen Chen, director of S&P Global Ratings, in charge of mainland market research, said that insurance costs for “green” vehicles in China are 20% higher than that of traditional internal combustion engine vehicles.
According to Chen, there are many factors contributing to this price difference, one of which is the loss ratio, a measure of costs for insurers, which is believed to be higher with new energy vehicles. The reason is that “green” vehicles often use parts and components that have not been mass-produced, leading to a more expensive situation to repair and replace in the event of an accident.
In the US, according to Chase Gardner at Insurify, insurance for electric cars also tends to be 15% more expensive than traditional cars, mainly because electric vehicles here are often seen as luxury vehicles.
Next, repair costs are also a reason to push up insurance prices because “there are not many electric vehicle repair facilities in the US”, although in general users will pay lower maintenance costs over time.
In terms of accident rates, Insurify’s analysis shows no difference between electric, hybrid or internal combustion engines.
Meanwhile, according to China’s official statistics, new energy vehicles in the country are more prone to fire than traditional fuel vehicles. Citing data from the Rescue and Rescue Department under the Ministry of Emergency Management of China, the first quarter of 2022 recorded 640 cases of “green” cars catching fire, 32% higher than the same period last year. The agency also said that this figure is much higher than the 8.8% increase of traditional means of transport.
According to the China Passenger Transport Association, in the first eight months of 2022, 3.26 million new energy vehicles were shipped, double that of last year, and 25% of the quantity was consumed domestically, higher than 15% last year.
In contrast, new energy vehicles still account for a small share of the US auto market. The country’s energy information agency said that in the fourth quarter of 2021, hybrid and electric cars accounted for only 11% of light vehicle sales (including vans and pickups) here.