- Electric vehicles with 300 lb-ft of torque or more are linked to higher insurance losses
- For a wide range of popular electric vehicles, this means common AWD versions
- Higher EV curb weight and torque-to-weight ratio add to the correlation
- This signals the need for smarter pricing by insurers to navigate the different risks of EVs.
Electric cars are often praised for having lots of “instant torque” and strong, quick acceleration. Some brands go even further, claiming Faster EV acceleration increases safety.
But as a broad analysis of insurance industry data shows, many of those high-powered EVs—the popular all-wheel-drive types—may also be the ones linked to continued EV insurance costs spike.
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“Our data also shows that the additional torque provided by powerful EV motors is positively correlated with their loss costs,” Xiaohui Lu, vice president of global business development at LexisNexis, told Green Car Reports.
Specifically, EV with over 300 lb-ft of torque corresponds to higher insurance loss costs, based on LexisNexis’ internal analysis of insurance claims across EV brands (the company declined to say where the best-selling EV brand Tesla ranks) and across insurers. And taking into account EV Curb Weight and the torque-to-weight ratio relationship, the relationship is even more pronounced.
The data set itself is not enough to say whether having so much power and acceleration makes drivers more daring and aggressive in their driving behavior, or whether there is something less safe about high-power EVs.
It’s also difficult to compare models in the gasoline fleet, since cars with more than 300 lb-ft of torque are statistically less common, and they tend to be in niche performance models, so there may also be a marked difference in the type of people who buy them. But on a comparable basis, gasoline cars don’t show such a sharp risk threshold.
2024 GMC Hummer EV SUV
It’s complicated—not just the electric car drivers, but also the repair costs and more.
Correlation does not imply causation, and insurers simply need to better understand Why high torque electric cars are likely to increase prices for everyone else.
“While torque contributes to the higher loss insurance costs of electric vehicles, it is important not to view these numbers solely through the lens of torque,” Lu stressed. “For example, vehicles with higher torque typically have higher prices, higher repair costs, and sometimes even higher daily mileage, all of which are associated with higher loss insurance costs.”
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One-pedal driving on some electric vehicles is one such example that can cause minor crashes, at least for novice drivers. “Our data shows that a learning curve for new drivers switching from ICE vehicles for electric vehicles,” Lu added of the risk factors.
According to data from the company released in June, Electric cars are much more expensive to insureOverall, claim frequency was 17% higher and claim severity was 34% higher than what is considered the “traditional segment” of the vehicle market, with both the number of claims paid and the amount of claims paid growing faster than those figures for the market as a whole.
More electric cars in the risk pool won’t solve the problem
Some have theorized that the relatively small model range of electric vehicles is part of the problem. But in 2023, electric vehicle sales in the United States jumped 54% from 2022 to 1.4 million, resulting in a 40% increase in the total number of insured electric vehicles—3.9 million including both electric and hybrid vehicles. And the surge in electric vehicles in the fleet only perpetuates the trend of higher claims and higher costs.
Industry data shows that even when EVs suffer minor damage, the more complex collision repairs are part of the reason for the higher costs, as are the heavier weight of EVs and the higher levels of vehicle damage, especially compared to other vehicles.
Tesla Model 3 2024 Performance
Those factors create “increased profitability challenges” for all EV insurers, according to the company. As we recently pointed out, High cost of battery replacement may have something to do with those challenges. And with prices still rising for EVs, it seems wise that Tesla has created its own insurance in an effort to reduce costs and increase competitiveness.
According to the insurance-funded Highway Loss Data Institute, Teslas don’t crash more often than other vehicles, but the consequences are more costly.
Are popular AWD electric cars at risk?
Lu also stressed that the company’s data shows that some electric vehicles have lower loss rates and costs, and there are drivers who use electric powertrains to drive more safely, so insurers must navigate this new world and offer smarter, more competitive rates.
All-wheel drive has a reputation for adding safety, but it hasn’t proven to be true in the way it’s been implemented for electric vehicles so far. Unfortunately, as the data accumulates, that could mean insurers don’t treat all Model Ys or Ioniq 5s or EV6s the same, and instead view the high-powered, low-cost AWD versions of many popular electric vehicles as higher-risk performance models.
