‘Sustainable’ Electric Cars Scrapped Over Minor Battery Damage, Undercutting Gains and Driving Up Insurance Costs

The push for so-called “sustainable” electric vehicles (EVs) is facing a major problem: minor damage to the battery pack can lead to the entire car being scrapped, leaving the expensive battery packs piling up in the scrapyard.

This issue is undercutting the gains from going electric, and causing higher insurance premiums.

With no way to repair or assess slightly damaged battery packs after accidents, EVs can lose up to 50% of their price tag, rendering it uneconomical to replace them, according to a Reuters report.

According to Thatcham Research, an automotive risk intelligence company, this issue undermines the idea of a “circular economy,” as battery packs that could be reused are instead thrown away.

“We’re buying electric cars for sustainability reasons. But an EV isn’t very sustainable if you’ve got to throw the battery away after a minor collision,” said Matthew Avery, a research director at Thatcham Research, an automotive risk intelligence company.

In addition, the production of EV batteries generates more CO2 than fossil-fuel models, which means that EVs need to be driven for thousands of miles before they offset those extra emissions.

While some automakers like Ford Motor Co and General Motors Co have made battery packs easier to repair, Tesla Inc has taken the opposite approach.

Experts have described Tesla’s Texas-built Model Y battery pack as having “zero repairability,” as the battery pack is part of the car’s structure and cannot be easily removed or replaced.

Insurers and industry experts warn that unless carmakers produce more easily repairable battery packs and provide third-party access to battery cell data, already-high insurance premiums will keep rising as EV sales grow and more low-mileage cars are scrapped after collisions.

Lack of access to critical diagnostic data was raised in mid-March in a class action filed against Tesla in U.S. District Court in California.

There are a growing number of repair shops specializing in repairing EVs and replacing batteries.

However, insurers cannot access Tesla’s battery data, making it difficult to assess the extent of the damage and take appropriate action.

Insurers said that making batteries in smaller sections or modules that are simpler to fix, and opening diagnostics data to third parties to determine battery cell health, would help solve the problem.

EV battery damage makes up just a few percent of Allianz’s motor insurance claims, but 8% of claims costs in Germany.

Insurers in Germany pool data on vehicle claims and adjust premium rates annually, so if the cost for a certain model increases, it raises premium levels.

Christoph Lauterwasser, Managing Director of the Allianz Center for Technology, said, “the handling of batteries is a crucial point.”

Allianz has seen scratched battery packs where the cells inside are likely undamaged, but without diagnostic data it has to write off those vehicles, Reuters notes.