Insurance companies scrap all battery-powered cars with very low damage because there is nothing to be gained by repairing them.
Bloomberg's report by Jamie Nemo on April 13, 2024
EV sales in major global markets are already in the doldrums. Finding enough repair technicians in the UK is a challenge, which has the potential to further dampen demand.
Insurance companies and repair companies, such as the British Automobile Association, which provides roadside assistance services in the UK, say a lack of trained technicians who can handle the repair of state-of-the-art electric vehicles has led to higher repair costs. Add to that the cost of waiting too long for replacement parts, and the insurer chooses to pay the full amount for the car with relatively minor damage, sending the EV into the garbage dump prematurely.
Marco Distefano, general manager of AXA's UK retail division, said a seemingly simple collision that damaged the battery or compartment "could have resulted in a complete write-off of the vehicle". "Eventually, this will drive up the price of insurance."
According to the Association of Motor Industries, which provides training and certification, less than 10% of the UK's 236,000 car mechanics are qualified to operate an EV battery or its casing directly. While many technicians can complete less demanding tasks, the most challenging repairs require additional training given the complexity of the circuit and the risk of electric shock.
During an interview with Birmingham, AA trainer Darren Norton said: "Because you're dealing with a really infallible situation, the requirements are raised a lot. On these systems, death is instantaneous".
Drivers are also concerned that a collision is more likely to result in the scrapping of an electric vehicle, according to data from Thatcham Research, a British consultancy. Long lead times and a shortage of fully functional charging points have also hindered demand for eco-friendly vehicles, the company said in a report last year.
With 1 million electric vehicles already on the road, this shortage is expected to get worse. Repair shops are starting to train staff, but the IMI estimates that the UK will still have a shortage of around 30,000 qualified technicians by 2035, when the ban on the sale of new internal combustion vehicles will come into effect.
Since 2022, the share of UK battery electric vehicle sales in the market has been declining. According to the British Association of Motor Manufacturers and Traders, sales in March were 15%. According to a January report by Bloomberg, battery electric vehicles are twice as expensive to insure as conventional cars.
Other factors are also influencing the once straightforward decision of whether an insurance company should repair or replace a car after an accident. Replacement parts are expensive and take longer to arrive from abroad, which increases the downtime of damaged cars and drives up ancillary costs such as car rentals.
When the cost of a claim is close to or exceeds the value of the vehicle, the insurance company will usually take back ownership of the vehicle, either scrap it, disassemble it into parts, or repair it and sell it again (if the damage is minimal). Synetiq, a UK-based car dismantling company, says on its website that the handling of electric vehicles and vans has increased by 55% over the past year. The company has also set up a division to recycle expensive battery materials such as lithium and nickel.
High repair costs have long plagued EV manufacturers such as Tesla, as they lack the dedicated service network of traditional automakers. The American car rental giant Hertz had to scrap Tesla due to the high repair cost of vulnerable parts such as radar components.
Lee Houston, EV Technical Liaison Engineer at the British Automobile Association, said many of the dismantled or crushed cars in the UK could be repaired. He said that as long as the battery is dented or marked, "it will need to be replaced, which will lead to the scrapping of the car", as the cost can range from £15,000 (about $19,000) to £20,000.
Other countries have responded more effectively to these challenges. Germany is Europe's largest car market, and the shortage of skilled workers is less pronounced in Germany than in the UK, according to ADAC, the country's main roadside service provider.
A spokesman for the Norwegian Automobile Federation said that 82% of new cars sold in Norway last year were electric vehicles, so there are no problems in terms of electric vehicle capabilities, but there is a general shortage of mechanics. The Swedish Association of Automobile Retailing and Repair says that in Sweden, mechanics' EV skills are improving rapidly.
While the additional training required to repair EV batteries is not cheap, the challenges facing the UK are not insurmountable. AXA UK believes that the cost of four days of training for a mechanic is around £2,500, which is acceptable for large chains, but smaller stores will need to decide whether to receive training or not.
At Kwik Fit, one of the UK's largest car repair groups, only 15 out of about 1,500 technicians meet the Level 3 or 4 standards required for the repair of EV battery cells and modules.
Ben Bout, Head of Service, Maintenance and Repair Development at Kwik Fit, expects that the job will eventually attract more candidates who are more familiar with diagnostics and electrical engineering concepts.
"When it comes to battery repairs and repairs for individual cells and modules, people still have a fear of the unknown," Bout said. Once there are more trained EV technicians, "repairs rather than replacement become more feasible."