EVs in UK may become unaffordable as insurance premium skyrockets

British motorists face a significant challenge in transitioning to electric vehicles (EVs) as the cost of insuring these zero-emission cars has surged to twice that of traditional combustion-engine models. According to UK insurance broker Howden Group Holdings Ltd., the average premium for EVs reached £1,344 (US$1,700) by the end of last year, primarily attributed to elevated repair expenses, prolonged workshop durations, and a scarcity of trained mechanics for EV battery repairs. Howden’s UK and Ireland Chief Executive Officer, Carl Shuker, explained, “Lengthy repair times, rising component costs, and increased write-offs of EVs due to low residual values contribute to the escalating insurance expenses.” This sharp increase in EV insurance costs, coupled with the already higher price tag of electric vehicles compared to their fuel-burning counterparts, presents a setback for an industry experiencing signs of a slowdown. Leading electric car manufacturer Tesla recently reduced prices for its popular Model Y in several markets, while Audi announced a scaling back of its EV roll-out in December. In addition to financial considerations, the electric vehicle market faces challenges such as a cost-of-living crisis and slow advancements in charging infrastructure across Europe, including the UK. The insurance landscape for EVs saw a notable 50% increase in premiums last year, outpacing the growth in coverage costs for combustion-engine models. Insurers deny profiteering, asserting that premiums are based on the actual cost and frequency of claims. Notably, accidental damage claims for EVs are, on average, 35% more expensive than similar claims for combustion vehicles, as reported by Howden. This surge in insurance expenses comes at a time when the growth of EV market share in the UK halted in 2023 for the first time, underscoring a decline in demand for battery-powered cars.