Electric Vehicles

The demand for electric vehicles (EVs) continues to grow. From 2013 to the end of July 2019, new registrations of plug-in cars in the UK increased from 3,500 to more than 223,000.

Given the rising demand for EVs, most of the main Automotive OEMs are now offering electric vehicles in their product range.

One of the biggest challenges facing OEM’s producing EV’s is the cost of the battery, with an additional cost of up to £12,000 to produce an EV compared to a combustion engine. Other than a few premium models, OEM’s lose money on every EV sold. Battery prices across the industry are now reducing, and the costs to produce EV’s will reduce in the next 5 years.

Recognising the appeal of EVs, OEMs are increasingly battling to innovate within the electric vehicle space, with Aptera boldly claiming it can make a three-wheeled EV with a 1,000-mile range, and Tesla lowering the price of their EV’s in the UK, with the new Model 3 series.

In an attempt to promote the uptake of electric vehicles in the UK, the Government’s Office for Low Emission Vehicles (OLEV), offers a plug-in grant. The grant provides up to 35% of the cost of the car, up to a maximum of £3,500, and up to 20% of the cost of a van, up to a maximum of £8,000, towards the cost of eligible vehicles. In addition, there are grants of up to £500 available to offset the cost of home charging points.

In a further push to promote the usage of EV’s in Britain, the government recently announced that company car drivers that choose a pure electric vehicle will pay no benefit-in-kind (BIK) tax in 2020/21.

 

EV consumer anxiety

Despite efforts being made to increase EV uptake and a rising number of drivers opting for plug-in vehicles, a degree of consumer anxiety remains in relation to electric cars.

One of the biggest anxieties is the fear that an electric vehicle will have an insufficient battery range to reach its destination.

Research shows that around 37% of motorists cite a distance of up to at least 300 miles, as the range that would persuade them to purchase a pure electric vehicle.

 

Challenges for insurers

With the EV industry growing at a rapid rate, insurers are facing a number of challenges in relation to insuring these less conventional vehicles.

The key challenges for insurers involving the EV market include the cost and availability of specialised parts for EV’s, the fact that repairs need to be carried out by specialist mechanics and recovery agents, expensive batteries, and collisions with pedestrians are potentially higher due to the quiet running of electric vehicles.

Nelson Policies at Lloyd’s aims to help overcome the unique EV insurance challenges. Our underwriters specialise in providing bespoke solutions for UK businesses and our product is designed to accommodate all types of commercial vehicles, including electric cars.

To find out more about our EV product, get in touch with our motor fleet insurance experts today.

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