You’ve probably heard that insurers are more likely to write-off EVs than combustion vehicles after accidents. As Mitchell’s Ryan Mandell explains, the statistics say otherwise

More parts, increased labour and greater complexity — all are attributes that describe the average EV collision repair compared to one for a vehicle with an internal combustion engine (ICE).

As EVs continue to occupy a larger portion of the Canadian passenger vehicle fleet, the share of EVs undergoing collision repairs grows, too. In Q4 2023, EVs represented 3.25 per cent of all repairable claims in Canada, up 44 per cent from Q4 2022 and 110 per cent from Q4 2021.

This continued growth trajectory will impact the repair facilities responsible for fixing these vehicles, in addition to the insurers that underwrite them and the consumers who pay their monthly premiums. Insights that separate fact from fiction can help each of these groups better navigate the transition.

Insurance realities

A common misconception regarding EV insurance claims is that carriers are declaring these vehicles as total losses at a higher rate than their ICE counterparts. There seems to be a view that EV batteries are often damaged during a collision, resulting in exorbitant repair estimates that are not cost-effective for a shop to undertake.

Mitchell’s claims data, however, tell a different story. Last year, 2021 model year and newer ICE vehicles (a time period that permits accurate comparison by normalizing differences in vehicle technology and ACV) were written off as total losses 6.77 per cent of the time in Canada. By comparison, EVs were totaled only 5.71 per cent of the time.

There are two reasons for this: first, EVs have generally had a much higher actual cash value (ACV) than ICE alternatives (though that’s evolving); and second, the incidence of collision-related battery damage is actually quite low.

As price parity between EVs and ICE vehicles becomes a reality, the ACV disparity will likely decline. But indications are this will only bring write-off rates into balance. In the second half of last year, for example, major price cuts by Tesla in October had a knock-on effect that led to lower used EV prices. Thus far in 2024, as a result, the price premium for used EVs over 2021 model year and newer ICE counterparts is only 16.81 per cent compared to 26.53 per cent in 2023. With that, we’re seeing write-off rates become increasingly similar — 7.48 per cent for EV versus 7.44 per cent for 2021 and newer ICE vehicles.

In other words, even with this increase in price parity, insurers aren’t declaring an excessively high rate of total losses for EVs. Instead, they are following trends similar to the rest of the fleet.

Repair complexities and costs

From the very start, an EV needs to be treated differently upon arriving at a collision repair facility. The mere presence of the high-voltage battery creates a significant safety risk for anyone who is not trained in proper protocols.

For example, precautions must be taken to de-energize the vehicle, which may include disconnecting certain components or even completely removing the battery. For a repair facility to safely return the automobile to pre-accident condition, its technicians need the appropriate training and certifications. The facility also needs the right tools and equipment to ensure technician safety and an efficient repair. 

The design of EVs presents additional cost pressures for a typical collision repair. The inner structure is much more simplified, and the vehicle lacks an internal combustion engine which, for ICE vehicles, is critical in the absorption of crash energy. EV manufacturers have added additional parts closer to the exterior of the vehicle to aid in the efficient dispersal of crash energy. This results in the replacement of more parts because of mild to moderate patterns of damage.

A clear example of this is the 2022 Ford F-150 Lightning, which has two extra parts on the front end of the vehicle that the 2022 F-150 XLT with a 3.5L EcoBoost engine does not. The Lightning is equipped with an additional front bumper isolator as well as a grille reinforcement that is non-existent on the XLT. This adds nearly $2,000 in parts cost to the Lightning repair bill.

Overall, EVs have 33.45 per cent more replacement parts and 22.12 per cent more total operations written on the collision-damage estimate than 2021 model year and newer ICE vehicles. The additional operations are due to more replacement parts as well as the extra steps required to properly mitigate the vehicle’s high-voltage battery and ensure its technology and safety systems are brought back to pre-loss condition.

Labour needs are also greater for EVs, with 5.86 additional hours on average for repairable estimates, resulting in a labour cost delta of 35.64 per cent over 2021 and newer ICE vehicles. The same analysis of 2021 model year and newer vehicles found that EV estimates are 50 per cent more likely to contain operations relating to vehicle sensors. Any time sensors are affected — even if they are not damaged — the associated system will require re-calibration. This can lead to additional repair time and cost.

The net result is that EVs are 15.48 per cent more expensive to repair than comparably aged ICE vehicles and take 4.7 days longer to fix, on average. To maintain control of the repair, many shops are bringing re-calibration work in-house. Doing so can reduce cycle time and introduce new revenue opportunities for these facilities.

Trust data not assumptions

As more EVs appear on Canadian roads, they will have an even greater effect on the collision industry. Properly restoring these automobiles to pre-accident condition presents a unique challenge to carriers, repairers and consumers. However, despite higher parts and labour costs, increased complexity, and the safety risks associated with high-voltage batteries, not all assumptions surrounding EVs and their proper and safe repair are supported by the latest data.

Ryan Mandell is Director of Claims Performance in Mitchell International, Inc.’s Auto Physical Damage division, where he works hand-in-hand with insurance executives and material damage leaders to provide actionable insights and consultative direction.