American Energy Alliance

Low Battery Warning For Biden’s EV Dreams

Minor damage to an electric vehicle battery pack can lead to the entire car being totaled, leaving the expensive battery packs piling up in the scrapyard and causing higher insurance premiums. With no way to repair or assess slightly damaged battery packs after accidents, electric vehicles can lose up to 50 percent of their price, rendering it uneconomical to replace them, as batteries are the most expensive component of electric vehicles costing many tens of thousands of dollars.

In some cases, the battery packs are not even accessible. Tesla’s Texas-built Model Y battery pack has “zero repairability,” because the battery pack is part of the car’s structure and cannot be easily removed or replaced. Tesla’s decision to make battery packs “structural” has allowed it to cut production costs but pushes costs back to consumers and insurers. Without access to Tesla’s battery data, it is difficult for insurers to assess the extent of battery damage and take appropriate action.

Although electric vehicles constitute only a fraction of vehicles on the road, the trend of low-mileage electric vehicles being written off with minor damage is growing. Insurers and industry experts warn that unless carmakers produce more easily repairable battery packs and provide third-party access to battery cell data, already-high insurance premiums will keep rising and more low-mileage electric vehicles will be scrapped after collisions. According to insurance companies, making batteries in smaller sections or modules that are simpler to fix, and opening diagnostics data to third parties to determine battery cell health, would help the problem.

The lack of accessibility and data are resulting in battery packs that could be reused, but instead are thrown away, which reduces the sustainability argument of electric vehicles. Further, the production of EV batteries generates more carbon dioxide than fossil-fuel vehicles, which means that electric vehicles need to be driven for thousands of miles more than their fossil fuel counterparts before they offset the extra emissions. This would be compounded if battery damaged vehicles are prematurely scrapped.

Most carmakers believe their battery packs are repairable, though few seem willing to provide access to battery data. For instance, insurers, leasing companies and car repair shops are fighting with carmakers in the European Union over access to connected-car data.

In Germany, EV battery damage makes up just a few percent of Allianz’s motor insurance claims, but 8 percent of its claims costs. Insurance companies in Germany pool data on vehicle claims and adjust premium rates annually, so if the cost for a certain model increases, it raises premiums. Allianz has seen scratched battery packs where the cells inside are likely undamaged, but without diagnostic data it must write off those vehicles.

At Synetiq, the UK’s largest salvage company, over the last 12 months, the number of electric vehicles in the isolation bay – where they must be checked to avoid fire risk – at the firm’s Doncaster yard has soared, from about a dozen every three days to up to 20 per day. The UK currently has no EV battery recycling facilities, so Synetiq removes the batteries from written-off cars and stores them in containers. It is believed that at least 95 percent of the cells in the hundreds of EV battery packs – and thousands of hybrid battery packs – Synetiq has stored at Doncaster are undamaged and could be reused.

It costs more to insure most electric vehicles than traditional internal combustion engine vehicles. The average U.S. monthly EV insurance payment in 2023 is $20627 percent more than for a combustion-engine model. U.S. insurers recognize that if even a minor accident results in damage to the battery pack, the cost to replace it could exceed $15,000. A replacement battery for a Tesla Model 3 can cost up to $20,000; the car having retailed at around $43,000.

Tesla offers its own insurance policies in a dozen U.S. states to Tesla owners at lower rates than other insurance providers. Recently, Elon Musk indicated that Tesla has been making design and software changes to its vehicles to lower repair costs and insurance premiums. According to insurers and industry experts, electric vehicles, because they are loaded with all the latest safety features, have had fewer accidents so far than traditional cars.

Conclusion

The transition to electric vehicles so far has resulted in battery packs at scrap yards as insurers are totaling electric vehicles that have batteries dinged or scrapped because they lack the data to know whether the cells are still in good shape. Carmakers do not want to share battery data with third parties and as a result those electric vehicles with minor dents, and even those with low mileage are written off by insurers. Further, because EV batteries generate more carbon dioxide emissions than those in fossil fuel-powered vehicles, electric vehicles need to be driven more miles than their internal combustion counterparts to be rid of the excess emissions. Insurance companies warn that as more electric vehicles get totaled, insurance premiums will increase.

President Biden wants U.S. sales of electric vehicles to reach 50 percent of the market by 2030 and has begun with a goal that all light-duty federal government vehicles to be electric by 2027. In that vein, California and other states have banned the sale of fossil fuel vehicles, taking away vehicle and refueling choice for Americans. That will only increase costs for Americans as electric vehicles cost more than their fossil fuel counterparts, insurance premiums are higher, and as electricity costs rise from Biden’s transition to wind and solar power backed up by expensive batteries, refueling electric vehicles could increase above those for internal combustion vehicles. They already have for Michigan and certain model vehicles.  Government officials whose fevered dreams of electric vehicles as the solution to climate problems may have overlooked some very important issues their zeal is creating.


*This article was adapted from content originally published by the Institute for Energy Research.

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