Insurers Scrapping Crashed BEVs Citing Cost of Repairs
The huge cost of repairing BEVs involved in collisions has been recognized not only by insurance companies but even by Tesla’s chief Elon Musk.
Reuters reports that insurers are writing off rather than repair, for example, Tesla Model Y cars following comparatively minor accidents that then see these low mileage vehicles end up in auction houses. The news agency’s analysis suggests that of more than 120 Model Y cars that were declared a “total write off” after collisions, then listed at auction in December and early January, the vast majority had fewer than 10,000 miles on the odometer, according to online data from Copart and IAA, the two largest salvage auction houses in the United States.
The brand-new retail prices of those cars ranged from about $60,000 to more than $80,000. Copart and IAA auction listings note whether the vehicles were involved in front, rear or side collisions and typically include after-crash photos of each vehicle. However, the listings do not disclose specific details on the type of damage suffered. Insurance companies typically choose to scrap a vehicle and reimburse the owner with a cash settlement when the estimated cost of repair is deemed too high.
Copart listings in some cases included the names of insurance companies that had bought back crashed vehicles, then listed them at auction. Those companies include State Farm, Geico, Progressive and Farmers. Geico is part of Warren Buffet’s Berkshire Hathaway Inc.
All the Model Ys in the Reuters analysis were 2022 or 2023 models and were built at either the Fremont plant in Northern California or the Austin, Texas, plant. Of the 15 Model Y Long Range vehicles built in Austin from June through November and sent to auction after being totaled in crashes, all but one had fewer than 10,000 miles on the odometer.
An Austin-built 2022 Model Y Long Range involved in a front collision and listed by IAA in early January had a retail price of $61,388 and estimated repair cost of $50,388. A second Austin-built Model Y, involved in a side collision and listed by IAA, had a retail price of $72,667 and estimated repair cost of $43,814.
During Tesla’s fourth-quarter earnings call this week, Musk said premiums from third-party insurance companies “in some cases were unreasonably high” and that the EV maker’s insurance arm was putting pressure on those carriers by offering lower rates to Tesla owners.
He also said: “We want to minimize the cost of repairing a Tesla if it’s in a collision,” citing changes to vehicle design and software. He added: “It’s remarkable how small changes in the design of the bumper (and) providing spare parts needed for collision repair have an enormous effect on the repair cost. Most accidents are actually small – a broken fender or scratched side of the car.”
— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_
