The Expert Podcast

We called this one a few months ago. You watched our previous video about insurance claims on electric vehicles, and here it comes. Insurance companies are verifying that even small impacts or damages may total an electric vehicle. The reason why is that the vehicle battery is the most expensive part of a car. A minor impact not only affects the body panels that are damaged—when you crash a car, the body panels will be crunched. If you have a gasoline vehicle and you get a fender bender, or even a reasonably severe accident, usually the motor or engine of a gasoline car doesn't get damaged unless the impact goes right through the front grille bumper and actually impacts the engine. Usually, there's no damage to the engine itself unless it's struck.

However, with a battery, it's more of a sensitive electronic device. Think about your phone. If you drop your cell phone on the ground, the screen may smash, but sometimes the battery itself and the whole phone are damaged because of the impact. An electric vehicle has some of the same vulnerabilities. A slightly damaged battery pack, even if it's just through vibration, collision, or deceleration, can short out some of the connections. It can breach some of the cells inside the battery where the chemicals or rare earth metals inside are damaged or ripped. In some cases, these vehicles aren't even that destroyed on the outside, but the battery may have been impacted.

The other problem with electric vehicles is that, in a gasoline vehicle, the engine is a component—it’s like a metal box inside under the hood. It doesn’t extend to the outside of the car. A battery, on the other hand, is a flat device under the entire floor of the car. It extends all the way to the edge of the door. When you open your door, right underneath the door jamb is the battery in most electric vehicles. So, if the impact pushes in even two or three inches on the side, it can damage the battery.

On a gasoline vehicle, the damage has to be very severe to go one or two feet, sometimes more, into the battery or engine bay in order to cause damage to the engine. In fact, if the car is hit on the side or in the back, the engine is fine. The engine has to be hit directly in the front, and the fenders have to be pushed pretty far to actually contact the engine of a gasoline vehicle. With an electric vehicle, the battery spreads out and goes right to the edges of the vehicle, so any kind of minor damage—even going over a speed bump or hitting an object that falls off a truck on the road—could actually damage the battery. This can create a total loss vehicle.

As a consumer, this means two things. First, you have your deductible. Second, you have a total loss, meaning that sure, they’re going to pay you the amount of the vehicle, but now you have to go buy a new one, which is going to cost more money. For example, if you bought a new EV for $50,000, drove it for a year and a half or two years, and it got totaled, they might pay you actual cash value for that vehicle. This could be even less than $40,000, and now you have to go buy a new vehicle. Even if the new vehicle is the same, you will have to come out of pocket, possibly $10,000. Two years later, the new one may cost even more—$55,000 to $60,000.

This is a very large financial risk, whereas on a gasoline vehicle, it’s less likely that your vehicle will be totaled unless it's a very hard wreck. So, the risk of loss is much greater on electric vehicles.

Put your comments below and let us know what you think about this. Do you know somebody who’s had an electric vehicle damaged from a minor collision?