There are currently about three million electric vehicles (EVs) on U.S. roads, and that figure is expected to nearly quadruple by 2030. So, what does this rapid increase in EV sales mean for auto insurance? The MarketWatch Guides Team recently examined the rise of EVs and what it means for consumers and insurance companies.
What the Rise of EVs Means for Consumers
EVs come with a wide range of benefits for consumers beyond lower fuel costs: they have fewer moving parts that can break down, they don’t need oil changes and they’re generally easier on brake systems than their gas-powered counterparts. However, EVs also come with higher price tags, meaning they cost more to insure than traditional combustion-engine vehicles.
EVs More Expensive to Insure… Currently, Anyway
According to Kelley Blue Book, while there are fewer components at risk of breaking down in an EV, the parts that do require repair or replacement are more expensive. causing higher insurance rates. This is especially true with an EV battery. The average cost to replace an EV battery ranges from about $4,500 to nearly $18,000.
EV owners also face a shortage of qualified repair shops and technicians. The specialized training required to repair electric vehicles means fewer options and higher charges for customers when repair needs arise. However, as EVs become more common and represent a larger percentage of vehicles on the road, repair costs and MSRPs are expected to drop – and insurance costs will follow suit.
How Can EV Owners Save on Car Insurance?
Although not having to pay for gas or oil changes helps EV drivers save on costs, they can also offset higher insurance rates by taking advantage of local, state and federal rebates. There are also federal tax credits available on certain EV makes and models, thanks to the 2022 Inflation Reduction Act, which offers a tax credit of up to $7,500 for on qualified EVs with at least seven kilowatt hours of battery capacity. This credit was extended through December 2032.
The anticipated volatility in EV insurance costs means it’s more important than ever to compare quotes from multiple providers. This is one of the best ways to find quality, affordable coverage that fits your needs.
Source: MarketWatch
