The cost of insuring electric vehicles (EV) in Australia will eventually drop as demand continues, but in the meantime the industry's fledgling supply chain and relatively new technology mean premiums are almost double that of a regular car.
Kevin Baker wanted to purchase an EV last year but when he started researching insurance prices he found they were too expensive for him.
With the best of three quotes coming in at $3,000 per year to insure a SUV-style EV, compared to $800 for a combustion engine car, Mr Baker opted for a petrol vehicle.
"It wasn't anything to do with charging stations [that changed our minds]. We're city drivers … the cost savings on running the car were seemingly diminished by the insurance costs," he said.
A statement from the Insurance Council of Australia showed there were several reasons why the cost of insurance premiums for electric vehicles varied to petrol or diesel cars.
In the first instance, electric vehicles were generally expensive vehicles to purchase.
Other reasons included:
- The technology and parts in an electric vehicle are more expensive to produce and replace, specifically motor parts and battery
- Repairing damaged electric vehicles requires importing parts to Australia
- There are few electric vehicle service centres around Australia that can repair electric vehicles, vehicles may need to be transported to a distant location to be repaired
- Repairing electric vehicles requires specialty tradespeople, at present there are few of these trained people in Australia
- Dealing with damaged electric vehicle batteries is time and labour consuming. It also requires specialty equipment and disposal (recycling) methods
- The supply chain in Australia is in its infancy leading to higher costs, the situation here will not improve until the demand and then supply increases
The ICA statement also pointed out "many factors are considered when calculating a premium".
Uncertainty pushing prices up
According to Electric Vehicle Council chief executive Behyad Jafari, "far less" could go wrong with an EV.
He conceded though that if an EV did need repairing, at the moment there was no way to tell how long that could take.
Mr Jafari said it was also possible to insure an EV in Brisbane for about $1,500.
"The challenge they’re finding is if there’s been an accident, say, it’s about them knowing how long it will take for spare parts to arrive, given the longer it takes the more [insurance companies] have to pay for hire cars," he said.
"That’s easy information for the millions of petrol cars we have on the road, but insurance companies have to do more digging for EVs.
"There will be more insurance products that are better priced, but getting that spread across the market will take time.”
EV insurance wins out for some drivers
Mark Johns was living in Burnside, Victoria, when he found an insurer for his 2019 Tesla Model 3 that came in under $1,000.
He said other companies had quoted him up to $2,700.
Now living in Port Welshpool, he said he still paid less than $1,000 to insure his Tesla, less than for his 10-year-old Mercedes.
"I do not see electric car ownership as expensive. There are free charging services in shopping centres and we do not have to pay any service costs," he said.
Across the country in Perth, Quentin Hall said she also found it $200 cheaper this year to insure her Tesla compared to her 2016 diesel Volvo V40 sedan.
"So far in the four months I've owned the Tesla Model 3 I've not paid a cent on power. I charge during daylight off the [solar cells] on the roof," she said.
"I have enough in there for any cloudy days and wait for the next sunny one.
"There's not going to be any regular servicing, apart from two $30 pollen filter changes that I have to do myself every two years.
"I guess other than that there's going to be tyres every three to four years, but that's any car, and at that stage you should bleed your brake fluid as it's hygroscopic in nature."
RACQ general manager of insurance product and distribution Rosalind Searle said the cover provided by motor insurance for electric or hybrid vehicles "typically doesn't differ to that for internal combustion engines (ICE)".
"RACQ has a mix of traditional ICE and electric-hybrid vehicles insured in our portfolio," she said.
"Insurance premiums are based upon the likely risk of damage and the costs associated with repairing or replacing a damaged item. In the case of motor insurance, this includes the risks associated with the driver's profile."
A Suncorp spokeswoman said "some high end EVs may require the customer to call our contact centres to set up their policy but this is due to the high value of the vehicle, rather than it being an EV".
