Generally speaking, the cost of insuring electric cars is often higher, and it’s likely to continue escalating in the short to medium term. This increase is largely due to expensive batteries, which require specialist technicians for servicing and repair. In the words of the German Insurance Association (GDV), the costs of fixing electric vehicles exceed those of their petrol-driven counterparts by 30-35%. Furthermore, a recent US analysis found that electric car repairs were around 20% more expensive, largely due to the increased labour hours needed.
But why are prices predicted to rise?
Many car manufacturers are employing “gigacasting” techniques to make their vehicles more lightweight and efficient for the sake of streamlined production. While the term may remind one of a sci-fi film, it simply refers to producing vehicles with fewer parts, reducing both the cost and energy consumption during the building process. This could also lower the vehicles’ carbon footprint significantly.
A prime example is Toyota, which has introduced a unique construction method dubbed the Gigapress. It allows the main structure of their vehicles to be moulded from molten aluminium, considerably reducing the number of parts and steps involved. Currently, creating a section of a car involves about 86 parts and 33 different production steps, which is both time-consuming and costly. With the Gigapress, however, this process takes mere minutes.
Toyota, credited for revolutionising car production in the 70s and 80s with its “kaizen” system, now acknowledges that it’s borrowing heavily from another industry leader – Tesla.
In cooperation with Italian firm, Idra Press, Tesla has developed its own Gigapress, a device theoretically capable of rapidly constructing the base structure of vehicles such as the Model 3 and Model Y. It’s suggested that a Model Y could be created in 10 hours, perhaps triple the speed of competitors’ offerings. The Gigapress approach is a little more intricate for other manufacturers, as it needs to accommodate varying car models with distinct heights, lengths, widths, and weights. VW reportedly contemplated using the Gigapress technique for its upcoming EV series, but dismissed the idea. Interestingly, Tesla has also recently reconsidered its decision to gigacast the whole underbody of the vehicle. This suggests a correlation between cost reductions and the investment in manufacturing technology.
Intriguing as this may sound, what implications does it bear for the common EV owner?
A decrease in acquisition cost would evidently be favourable if the gigapress and gigacasting methods do indeed result in savings. However, what of the impact on insurance rates?
The mathematics at play is relatively simple. Existing vehicle designs allow damaged parts to be partly dismantled, repaired, or replaced. While Irish insurance companies largely base their pricing on the driver’s age and experience, the expense involved in mending damaged vehicles inevitably exerts upward pressure on insurance costs.
The cost of repairing a gigacasted vehicle could soar dramatically. It’s already problematic that a minorly damaged battery pack often necessitates writing off the entire vehicle. Pair that with the potential requirement to replace large chunks of gigacasting or, worse yet, the entire base structure of the vehicle – now comprised of a single composite of steel and aluminium – and the expenses could skyrocket. The GDV acknowledges that electric cars statistically incur 5 to 10 per cent less accidents than their combustion-engine counterparts, in cases where one vehicle inflicts damage on another. However, the advent of gigacasting could trigger another surge in insurance premiums.
Christoph Lauterwasser, the managing director of the Allianz Technology Centre, commented that although they have a comprehensive history of over 125 years working with combustion engines, the acquaintance with contemporary electric vehicles is quite recent, barely reaching a decade. He highlighted the evident lack of knowledge and expertise among garages, towing firms, fire rescue services and other professionals in managing critically damaged electric cars. This, coupled with the predicted surge in this sector, underlines the urgent necessity for strategic initiatives and measures.