Tesla EVs, Even Mildly Damaged, Being Written Off by Insurers

  • There were 120 Tesla Model Y electric vehicles listed in two major salvage auction houses recently, and the “vast majority” had less than 10,000 miles on them, according to a report from the Reuters news service.
  • The insurance companies that covered these vehicles decided that even with so few miles on them, these Teslas weren’t worth the $50,000 or so it sometimes costs to repair.
  • The cost of fixing a car has increased as convenience has declined over the years, prompting discussion about so-called Right to Repair laws, which would give owners more rights to fix the things they buy make.

Right-to-repair laws are starting to gain some traction, giving customers more rights to fix the products they buy. But just because you can fix something doesn’t mean it will be easy or affordable. Repairing your own car has become less and less common over the years, but at least local mechanics can come to the rescue. . . usually. When it comes to Tesla electric vehicles, however, some insurance companies decide that even low-mileage vehicles aren’t worth it.

Owners of certain car brands know that expensive repair bills come with the territory. But that doesn’t mean insurance companies want to play that game, and some of them are increasingly deciding to write off low-mileage Tesla electric vehicles because they’re too expensive to fix, according to a new report from Reuters.

2020 tesla model y

Reuters looked at recent salvage auction listings and found that the “vast majority” of the 120 Model Y vehicles listed had less than 10,000 miles on them. While these EVs originally cost between about $60,000 and $80,000, high repair costs will keep them off the road in the future, despite their low odometer readings. For example, a $61,000 2022 Model Y Long Range EV was in a front-end collision and would have cost more than $50,000 to fix if the insurer approved the repair. Reuters could not determine the type of incidents that caused the damage in these cases, but noted that several well-known insurance brands, including State Farm, Geico and Progressive, all decided that the solution was not in.

Insurance bill up to 30 percent higher

It’s not like people don’t pay to protect their Teslas. At the end of 2022, Nerdwallet reported that the average Tesla owner with a good driving history and good credit can expect to pay around $2040 per year for a Model Y and as much as $3044 for a Model X. The average cost to Insuring a Model 3 is nearly 30 percent higher than the national average for car insurance, Nerdwallet said.

Exactly how much more it costs to repair the average Tesla after an incident compared to other vehicles, both electric and ICE models, is difficult to determine, but Tesla has long been aware that insurance costs for its EVs are out of line with the average cost does not. for the industry. Tesla began offering its own insurance policies for customers in late 2019, promising that it would lower costs for Tesla drivers. Customers can certainly benefit from lower costs. As a story from The Drive showed in 2021, a Tesla service center quoted one Model 3 owner $16,000 to fix a battery pack coolant leak after it was damaged by road debris. An independent mechanic was able to fix the problem for $700, and The Drive argued the story proved that right to repair is an important issue for EVs.

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Tesla Model 3.

Chris Doane|Car and Driver

In turn, Tesla’s insurance-side business is now helping the automaker lower future repair costs, according to company executives. “[Tesla insurance] also gives us a good feedback loop to minimize the repair costs of Teslas – for all Teslas worldwide – because of course we want to reduce the cost of repairing a Tesla if it’s in a collision,” CEO Elon Musk said. said during a recent earnings call. , according to Teslarati. “Before, we didn’t really have good insight into it because the other insurance companies would cover the cost. And in fact the costs were in some cases unreasonably high.”

Tesla is using its insurance arm to make changes in how it designs its vehicles, Musk said on the call, according to Reuters. “It’s remarkable how small the changes are in the design of the bumper [and] providing parts needed for collision repair has an enormous effect on repair costs,” he said. “Most accidents are actually small — a broken bumper or scratched side of the car.”

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