Tesla EVs, Even Mildly Damaged, Are Being Written Off by Insurance Companies

Tesla EVs, Even Mildly Damaged, Are Being Written Off by Insurance Companies

Insurance companies are coming to the conclusion that repairing a broken Tesla would be prohibitively costly.

  • According to a recent Reuters news service article, 120 Tesla Model Y electric cars were recently advertised in two sizable salvage auction houses, and the “vast majority” of them had less than 10,000 miles on them.
  • Despite having so little miles on them, the insurance companies who covered these cars concluded that these Teslas aren’t worth the $50,000 or more it can often cost to fix them.
  • Over the years, the cost of fixing a car has increased while the simplicity of repair has diminished. This has sparked debate over so-called Right to Repair laws, which would grant owners more freedom to repair the objects they buy.

Laws allowing for the right to repair goods purchased by customers are beginning to gain support. However, just because something can be fixed doesn’t guarantee that it will be simple or inexpensive to fix. Over time, doing your own auto repairs has been less and less popular, but at least nearby mechanics can help, typically. But according to reports, some insurance firms are apparently determining that even low-mileage automobiles aren’t worth the bother when it comes to Tesla electric vehicles.

Owners of specific motor brands are aware that costly repair costs are a given. However, it doesn’t guarantee insurance companies will participate in the game, and some of them are increasingly choosing to write off low-mileage Tesla electric cars since the repairs would be too costly, according to a recent Reuters investigation.

The “great majority” of the 120 Model Y vehicles included in recent salvage auction ads, according to research by Reuters, had fewer than 10,000 miles on them. Despite having low odometer readings, these EVs, which initially cost between $60,000 and $80,000, won’t be able to be driven in the future due to significant repair expenses. For instance, a front collision on a $61,000 2022 Model Y Long Range EV would have required more than $50,000 in repairs had the insurer authorized them. Reuters was unable to identify the specific instances that resulted in harm in these cases, but they did observe that several well-known insurance companies, including State Farm, Geico, and Progressive, all came to the conclusion that the problem had not been fixed.

Insurance Bill up to 30 Percent Higher

People do pay to insure their Teslas, after all. According to a Nerdwallet report from late 2022, the typical Tesla owner with a clean driving record and good credit may anticipate paying roughly $2040 annually for a Model Y and up to $3044 annually for a Model X. According to Nerdwallet, the average cost of insurance for a Model 3 is over 30% higher than the national average for auto insurance.

Exactly how much more it costs to repair the average Tesla after an incident compared to other vehicles, both electric and ICE models, is difficult to gauge, but Tesla has long been aware that insurance costs for its EVs are out of line with the average cost for the industry. Tesla started offering its own insurance policies for customers in late 2019, promising that it would lower costs for Tesla drivers. Customers could certainly benefit from lower costs. As a story from The Drive in 2021 showed, a Tesla service center quoted one Model 3 owner $16,000 to fix a battery pack coolant leak after it was damaged by road debris. An independent mechanic was able to fix the issue for $700, and The Drive argued the story proved that the Right to Repair is an important issue for EVs.For its part, Tesla’s insurance side business is now helping the automaker lower future repair costs, according to company executives. “[Tesla insurance] is also giving us a good feedback loop into minimizing the cost of repair of Teslas—for all Teslas worldwide—because we obviously want to minimize the cost of repairing a Tesla if it’s in a collision,” CEO Elon Musk said during a recent earnings call, according to Teslarati. “Previously, we didn’t actually have good insight into that because the other insurance companies would cover the cost. And actually, the cost in some cases were unreasonably high.”

Tesla is using its insurance arm to make changes in how it designs its vehicles, Musk said on the call, according to Reuters. “It’s remarkable how small changes in the design of the bumper [and] providing spare parts needed for collision repair have an enormous effect on the repair cost,” he said. “Most accidents are actually small—a broken fender or scratched side of the car.”

Reference: https://www.caranddriver.com/news/a42709679/tesla-insurance-fixes-expense/

Leave a Reply

Your email address will not be published.