Insurance premiums for electric vehicles (EVs) have surged in the UK in the past year to cost twice as much as coverage for gasoline and diesel-fueled cars, according to data from UK insurance broker Howden Group Holdings cited by Bloomberg.
The premiums that EV owners pay have been rising faster than those for conventional internal combustion engine (ICE) cars, which has narrowed the pool of potential buyers who can afford the cost of having an electric vehicle. This could also pose a challenge to government plans for a faster adoption of EVs.
Electric vehicle premiums, at around $1,700 (£1,344) at the end of 2023, are much higher than insurance cover for conventional cars because of higher repair costs, hard-to-fix batteries, and a shortage of mechanics capable of fixing an EV battery. Higher costs of spare parts and more time EVs spent at repair shops are also to blame for the more expensive insurance premiums for electric cars, according to Howden Group.
Soaring insurance costs for EVs in the UK risk undermining "the appeal of electric cars and vans for businesses and motorists because it undermines one of the key advantages of electric vehicles, which is their cheaper running costs," Ben Nelmes, chief executive at non-profit group New AutoMotive, which supports EV adoption, told the Financial Times last year.
Higher insurance costs are one of the reasons for hesitance among consumers. Others include price affordability, anxiety over battery range, and a lack of a widespread network of charging points.
A recent study by the American Automobile Association (AAA) has found that an EV can lose as much as 12% of its range when temperatures drop to 20 degrees Fahrenheit or -6 Celsius.
Another study from last year showed that there were about 104 gas pumps per 1,000 road miles on average in the United States compared to just 22 EV charging points for the same road distance.
"While EV adoption continues to surge, ensuring convenient and accessible charging options is crucial for further growth and widespread acceptance of electric vehicles," the authors of the study by smart fuel card management platform Coast wrote.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More