UK drivers priced out of owning Chinese electric cars due to ‘sky high’ insurance costs
The UK car insurance industry is facing “real challenges” in covering Chinese electric vehicles amid an influx of the models into Europe, experts have warned.
A dearth in replacement parts, poor cooperation between insurance firms and Chinese manufacturers and a lack of technical knowledge of the new vehicles, has bumped up the cost and time of repairs.
This has meant insurers are being forced to pass on extra costs to British drivers in the form of higher premiums if they opt for Chinese EVs.
Andy Moody, founder and managing director of the broker Goshorty, told City PM: “The primary issue is how difficult the cars are to repair in a timely manner, should anything go wrong.
“Whilst the quality of the cars themselves is excellent, the failure of manufacturers to provide a steady stream of replacement parts is… effectively pricing out a huge portion of British motorists from owning a Chinese EV,” he said.
Moody added that even “standard repairs” for some Chinese models were “becoming impossible due to the scarcity of parts”.
The warnings come as Chinese electric cars flood into the European market, threatening European EV makers with cut throat prices and prompting the European Commission to moot imposing punitive new tariffs on imports.
Automakers such as Shenzhen-based BYD and GWM Ora have accelerated sales rapidly in Europe over the last year. In a report this month, Auto Express found that UK drivers of the two manufacturer’s models were facing especially steep quotes for cover, due to the limited number of insurers willing to underwrite them.
Speaking to City PM, Paul Daly, director of Insuredaily, said providers were “reluctant to insure” the new Chinese EVs and warned premiums would be “sky-high… if insurers are willing to cover them at all.”
“Until there’s a ready supply… and increased mechanical training to repair Chinese EVs,” premiums are unlikely to come down, Moody added.
BYD did not respond to a request for comment. In a statement, GWM Ora said it was “aware that a number of insurance companies in the UK market [were] providing limited options when it comes to insuring products from new automotive brands.”
A spokesperson said that the carmaker was “working with key industry partners on this topic to provide transparent insight into its parts, aftersales and retailer operations.”
It added it was looking at increasing parts stock in both UK and European facilities and introducing a ‘battery inspection’ team to assess electric car batteries involved in a collision.
EVs as a whole are already posing a slew of problems for insurance companies. Soaring repair costs, particularly of damaged battery packs, have led some providers to pull out of covering certain models.
Battery electric vehicle (BEV) claims are around 25 per cent more expensive than their combustion engine counterparts, according to Thatcham Research.