EVs cost twice as much to insure as fuel-burning cars in UK

(Bloomberg) –British drivers have to fork out twice as much to insure electric vehicles as they do for combustion-engine models, adding to hurdles to make the switch to zero-emission cars.

The average insurance premium for EVs jumped to £1,344 ($1,700) at the end of last year, around double the cost of cover for traditional cars, according to UK insurance broker Howden Group Holdings Ltd. The group cited higher repair costs, more time spent in workshops and a lack of mechanics trained to fix EV batteries.

“You’ve got length of repair times going up, you’ve got the cost of the component parts going up, and you probably see more EVs written off because residual values are particularly low at the moment,” said Howden’s UK and Ireland Chief Executive Officer Carl Shuker.

The soaring cost of insuring EVs — which already tend to be more expensive than comparable fuel-burning models — is bad news for an industry that’s exhibiting signs of a slowdown.

Tesla Inc. slashed prices for its best-selling Model Y in markets including Germany, France and Norway last week. Audi said in December it’s paring back its EV rollout. In much of Europe including the UK, buyers are confronted with a cost-of-living crisis and slow progress adding charging infrastructure.

Read More: Weak Demand for Used EVs Is Making New Ones Tougher to Sell Too

The cost of EV insurance premiums, which has climbed faster than cover for combustion-engine models, rose 50% last year. The industry has struggled with the aftershocks of the supply-chain issues sparked by the pandemic and the Ukraine war.

Insurers have denied profiteering and argue there’s little they can do without losing money because premiums are based on the cost and frequency of claims. Accidental damage claims for EVs are on average 35% more costly than similar ones for combustion vehicles, according to Howden.

The market share growth of EVs in the UK stalled for the first time in 2023, highlighting waning demand for battery-powered cars.