The insurance premium for China’s new energy cars, including electric vehicles, is reportedly around 20% higher than it is for a comparable conventional fuel-powered car, according to Wenwen Chen, the director of S&P Global Ratings, who is also the lead analyst of China insurance for the firm.
While several factors determine the pricing, Chen stated that insurance firms found the loss ratio to be higher for new energy cars in comparison to ICE cars.
As per Chen, a major reason behind that is more accidents, especially in the most expensive models as these vehicles often use components that have not been mass-produced yet.
Meanwhile, according to Chase Gardner, a data journalist at insurance comparison portal Insurify, in the US, insuring EVs is around 15% more expensive than for ICE cars, as most electric cars there are luxury models,.
Gardner also stated that another reason behind high rates is repair costs, as not many places in the country have the capabilities needed to serve EVs. However, Gardner also noted that over time, EV drivers end up paying lower maintenance costs.
In the US the difference in accident rates between combustion, hybrid, and electric cars was not much. But official road statistics from China cite that new energy cars are more prone to fires in the country than traditional fuel cars.
According to the Fire and Rescue Department under the Ministry of Emergency Management, in the first quarter of this year, 640 new energy cars reported fire incidents, which is a 32% rise from the previous year.
In 2021, around 3,000 cases of fire in new energy vehicles were reported, with the risk generally higher for these cars over traditional ones. The rise in fire incidents may be related to rising number of electric vehicles being sold in the country.
China, which is also the largest auto market in the world, has been implementing policies to support the growth of new energy vehicles as well, such as subsidizing purchases and making it easy to obtain license plates.
Many carmakers have therefore been rushing their launch of new energy vehicles, which according to an analyst are easier to produce than ICE models.
Source credit: https://www.cnbc.com/2022/09/27/chinas-new-electric-cars-cost-more-to-insure-than-fuel-powered-cars.html