Insuring electric vehicles – why can it be expensive?

From 2030 there will be a ban on the sale of new petrol and diesel vehicles in the UK. This follows on from the government’s 2020 ‘Ten Point Plan for a Green Industrial Revolution’ which introduced the future ban¹. Global sales of electric vehicles (also known as EVs) grew by 75% last year compared to 2021². As of May 2023, there are over 780,000 electric vehicles and an additional 500,000 hybrid vehicles driven across the UK³.

Road tax exemption

You don’t currently need to pay road tax on electric cars, but from April 2025 EVs will be be subject to this tax.⁴ Road tax is linked to CO2 emissions and if your car has high emissions your tax increases. As EVs have zero emissions, they are (until 2025) exempt. Hybrid vehicle owners pay less road tax because of their lower CO2 emissions. If you are an EV owner you must register your EV in the same way as you would any other vehicle, or potentially face a fine.

Are EVs difficult to insure?

EVs are becoming increasingly popular with an ever-growing list of new models to choose from. But there is a common misconception that they can be harder to insure than vehicles with internal combustion engines (ICE).

Getting cover for an EV is the same process as getting a petrol or diesel vehicle insured.

Cover for an EV includes standard protection such as cover for personal accidents and breakdown, and you can choose from the standard three levels of cover:

• Fully comprehensive car insurance.
• Third-party, fire and theft policies.
• Third-party only car insurance.

Electric car insurance should also provide cover for:

• Battery – damage or theft.
• Charging cables – loss, theft, or damage when they are in your car or used at a garage.
• Legal cover – accidents when the cables are in use (for example, if someone trips over them).

The process for insuring an EV is the same as getting cover for a petrol or diesel vehicle. You will need:

• Vehicle details (make, model and registration number).
• Your details (name, address, age, licence and driving history).
• Car use, miles per year, and where the car will be kept (garage, driveway or on the road).
• Details of any no-claims discount.

Why is insurance for EVs expensive?

While EVs are just as easy to insure as petrol/diesel cars and vans, premiums can be higher as they tend to be more expensive to replace, repair, and source specialist parts for. But in recent years, as more people own and drive them, it is possible to find cheaper EV insurance, so it’s worth searching the market for a suitable deal.

The cost of premiums for an EV can differ from a petrol or diesel vehicle because the battery is the most expensive component. The average cost for an EV battery in the UK is around £5,378, but can be as much as £9,195 for a BMW i7 and a massive £10,440 for a Mercedes-Benz EQS⁵.

EVs use lithium-ion batteries (similar to those used in smartphones and laptops). Lithium is expensive to mine and has reached record highs in price⁶. When combined with high demand, manufacturing EV batteries becomes expensive, and the cost is passed on to the consumer.

Why is Tesla insurance so high?

Teslas can be more expensive to insure than other electric cars because of their advanced technology and expensive car parts used in the manufacturing of them. Currently, Tesla’s Model-S 85 is the most expensive to insure, but the popular Model-3 sits at the mid-range insurance premium cost⁷.

Insuring a Tesla will depend on several factors:

• Driver’s age
• Driving history
• Location
• Car model

Should you need cover for your EV or hybrid vehicle please don’t hesitate to talk to our team and we will help with finding a policy to suit your budget and requirements.

Alternatively, email us at:

info@lloydwhyte.com

What matters to you, matters to us

1. www.gov.uk/government/publications/the-ten-point-plan-for-a-green-industrial-revolution
2. blog.evbox.com/ev-battery cost#:~:text=Besides%20lithium%2C%20EV%20batteries%20commonly,of%20an%20EV%20battery%20significantly
3. https://www.zap-map.com/ev-stats/ev-market/#:~:text=How%20many%20electric%20cars%20are,growth%20of%2040%25%20on%202021
4. https://www.joinbonnet.com/post/do-you-pay-road-tax-on-electric-cars
5. https://bookmygarage.com/electric-vehicles/how-much-does-an-electric-battery-cost-uk/
6. https://tradingeconomics.com/commodity/lithium
7. https://www.moneysupermarket.com/car-insurance/tesla/

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