The Expert Podcast

We talked about this a few months ago, where electric vehicles are now starting to see some pretty significant insurance claims. There's an article from Headline Wealth that discusses electric vehicles being totaled and sent to the junkyard because of very minor collision damage. Why is that? Why does an electric vehicle have to be totaled or junked because of minor damage? Well, it’s because of the way the car is engineered.

The battery pack in an electric vehicle is a very sensitive electronic piece of equipment. An impact that doesn’t even strike the battery pack can jostle it around enough to create internal damage. Think about when you drop your cell phone or when a computer falls off a desk—the electronic components inside those devices can be damaged just from the sudden impact of stopping quickly. It doesn’t actually have to be crushed by something striking it.

Another reason lies in the design differences between electric vehicles and gasoline vehicles. In a gasoline vehicle, the engine is a ball of metal located under the hood in one place. Unless the car is hit very hard in the front—where there’s a lot of protection with the bumper—or on the sides, which are protected by the tires, the engine is unlikely to be damaged in a minor collision. However, in an electric vehicle, the battery—essentially the "engine"—is the most expensive part of the car.

The battery in an EV is a flat electronic device that extends under the entire floor of the vehicle, from front to back and side to side. If you have a side impact that pushes in the rocker panel by just a couple of inches and it breaches the battery, all bets are off. According to many insurance companies, they’re being forced to write off electric vehicles with only minor damage because the battery is much more fragile, more sensitive, and easier to destroy.

Unlike a gasoline vehicle's battery, which you can replace for $100 at Pep Boys, an EV battery pack can cost $20,000 to $30,000—or even more. Sometimes, it’s worth more than the car itself. According to the article, the battery can be half the cost of an electric vehicle. That makes it more economical for insurance companies to declare the car totaled rather than replace the battery pack. Even if you want to replace it, some carmakers are unwilling to provide the information needed to repair the battery because it’s part of their proprietary knowledge.

If you throw away the vehicle at an early stage, you lose all the environmental benefits in terms of carbon emissions. For an EV to make sense environmentally, it needs to be on the road for 10 to 15 years to offset the manufacturing impact. This raises a significant issue: electric vehicles are more likely to be totaled or junked due to very minor impacts. Sometimes, the impact may not even damage much of the body panels. But if there’s severe vibration—say, the car goes over a bump or a curb the wrong way—the battery can be breached internally, even without any visible external damage.