Impact of BEVs on Collision Repair and Auto Insurance

Collision repair facilities must now either maintain or expand their current capabilities to meet the growing demands linked to battery electric vehicles (BEVs), influencing how auto insurers approach underwriting these vehicles. This development arises from BEVs' intricate electrical structures, software-driven features, and the extensive sensors they possess. These features heighten the need for diagnostics and calibration, ensuring consistent repair complexity.

Mitchell's latest Plugged-In: EV Collision Insights report indicates that BEVs averaged 1.70 calibrations per repair estimate last year. In comparison, internal combustion engine (ICE) vehicles and hybrids, including mild hybrid electric vehicles (MHEVs) and plug-in hybrid electric vehicles (PHEVs), averaged fewer calibrations. The increased frequency of calibrations across vehicle types suggests that regions with a higher prevalence of electric and hybrid vehicles are facing more intense repair demands.

Despite a roughly 2% decrease in new BEV sales in the United States, the incidence of repairable claims has risen. PHEVs saw a 6% increase in repairable claims, while MHEVs experienced a 20% rise. Similar trends were observed in Canada, with claims up by 26% for PHEVs and 29% for MHEVs. Ryan Mandell, Mitchell’s vice president of strategy and market intelligence, attributes these rising claims to a growing number of BEVs on the road, despite a reduction in sales momentum following the cessation of government tax incentives.

Changes in Vehicle Value and Claims Severity

The report discusses annual changes in vehicle value and claims severity. Total loss market values have decreased significantly, with BEVs experiencing the largest decline of 6% in the U.S. and 13% in Canada due to factors such as accelerated depreciation. Additionally, the average severity of repairs for BEVs decreased by 5% in the U.S. and 2% in Canada, although claim costs for MHEVs rose by 4% to $5,054 while remaining stable at $6,267 in Canada.

Regarding parts sourcing, the report highlights that original equipment manufacturer (OEM) parts are predominantly used in BEV repairs. These parts accounted for 86% of the parts dollars on estimates for repairable BEVs, compared to 62% for ICE vehicles. The use of repairable parts stood at 13% for BEVs versus 15% for their ICE counterparts. This preference for OEM parts underscores the complexity and specific requirements of repairing BEVs.