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$18,000 to repair an electric vehicle: insurers will increase their prices?

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Benjamin Vassalle damaged the right front fender of his electric vehicle last January.

  • Yanick Lepage (View profile)Yanick Lepage

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When Benjamin Vassalle hit a deer with his electric car last January, he never imagined that the repair could last two months and that the bill would amount to tens of thousands of dollars for his insurer.

The shock was pretty good, but it's true that the front of the car was damaged, the headlights [also], explains the resident of the Niagara region.

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Benjamin Vassalle considered that the damage to his vehicle was overall quite limited.

His insurer first asked him to have his vehicle towed to an independent mechanic in St. Catharines, on the shores of Lake Ontario.

The mechanic did not did not understand why they had received this car, relates Mr. Vassalle. He didn't have the parts and he couldn't order them either.

Only Tesla mechanics could repair the vehicle. After more than a week in the snow, the damaged car was sent to the nearest workshop in Oakville, a suburb of Toronto.

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Benjamin Vassalle's car was repaired at a Tesla workshop in Oakville, Ontario.

Although it lasted several weeks, the repair at the manufacturer took place without any unpleasant surprises, admits the owner of a Model 3.

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The bill, which amounts to more than $18,000, however leaves him perplexed.

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When we received the report of the intervention, that's when we said: "Wow, that's salty!"

A quote from Benjamin Vassalle, owner of a Tesla Model 3

We didn't have $18,000, so the insurer covered [the bill]. But we just had a bumper problem. We didn't expect it to cost so much to repair, says Mr. Vassalle.

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Benjamin Vassalle is the owner of a Tesla Model 3 vehicle.

In total, around sixty parts were repaired or replaced. Even the windshield, which did not appear to be damaged by the accident, was replaced.

The insurer also reimbursed the $2,000 that Mr. Vassalle had to pay to have the car towed after the accident, in addition to providing him with a rental vehicle during the repair.

When we see the intervention report and the price that it cost the insurance, we wonder if we are going to have [price] increases which are going to happen, wonders the motorist who is already paying more than $500 per month to insure your vehicle.

A recent report from the firm Morningstar DBRS does nothing to ease the fears of Ontarians .

Insurers will need to adjust their pricing models as more claims related to electric vehicles are generated, reads the document released in mid-February.

This could lead to rate increases partly because of the higher price of electric vehicles and partly because they are more expensive to repair, the financial rating agency adds.

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The financial rating agency Morningstar DBRS expects insurers Canadians are increasing their insurance premiums for electric vehicles in the coming years, particularly due to high repair costs.

Price changes observed in countries where electric cars are more popular can serve as an indicator of future trends in Canada, judges Morningstar DBRS.

In the UK, for example, insurance premiums for electric vehicles jumped 72% last year, compared with 29% for combustion cars, according to data from UK insurance comparison site< /p>

It won't happen in Canada, however, tempers Victor Adesanya, one of the authors of the report, in an interview with Radio-Canada.

We will have price increases, but not shocks. And the reason is that [the insurance industry] is regulated in Canada, adds the vice-president of insurance of the group responsible for analyzing global financial institutions at Morningstar DBRS.

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Victor Adesanya believes that regulations surrounding the insurance industry will limit price increases.

Across the country, provincial financial authorities must approve requests for price increases made by insurers each year, a system that helps stabilize increases, according to Mr. Adesanya

Rob de Pruis of the Insurance Bureau of Canada (IBC), however, maintains that the high repair costs of electric vehicles are already putting pressure on insurers.

We work with many automobile manufacturer associations to try to […] reduce the cost of complaints, explains the BAC's national director of consumer and industry relations.

He admits, however, that insurers have little influence over manufacturers and that for the moment there is no easy solution.

Vehicles internal combustion engines have several thousand parts. By comparison, electric vehicles have much less, but they are very expensive, notes Colin Simpson, dean of the Center for Lifelong Learning at George Brown College.

The main battery alone can cost $20,000 to replace, he notes.

Very few mechanics also have the skills necessary to repair these vehicles, observes Mr. Simpson. These skills are currently concentrated in the workshops of automobile manufacturers.

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Colin Simpson is the dean of the Center for Lifelong Learning at George Brown College.

If someone has a problem with their Tesla or Nissan for example, they generally return to the dealership. But as these electric vehicles age and are no longer protected by warranty, it can become prohibitive to take the vehicle to the dealership, points out the engineer by training.

George Brown College has been offering a distance learning program since fall 2022 to learn how to repair electric vehicles.

Nearly 700 students from around the world are currently enrolled.

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George Brown College's training program attracts students from many backgrounds, says Colin Simpson.

So far, Simpson believes his program is unique, but he expects such training to become more and more widespread in the years to come.

Eventually, the Expanding the pool of skilled workers could reduce electric vehicle repair costs, says the dean of the Toronto college's Center for Lifelong Learning.

However, certain characteristics of electric cars will continue to make them expensive to repair, according to him.

He notes, for example, the weight of vehicles which increases damage in the event of an accident. Their unibody construction also makes them much more difficult to realign, and more likely to be irreparable after a collision.

There's no doubt about it, these are difficult vehicles to repair.

A quote by Colin Simpson, Dean of the Center for Lifelong Learning at George Brown College

If for the moment the autonomy of electric vehicles and the lack of charging stations remain the main concerns of motorists, the repair costs and the resulting price of insurance could become a brake on the adoption of these cars, estimates Mr. Simpson.

The countdown is on, however, as Ottawa has committed to ensuring that all vehicles sold in the country are electric by 2035.

Mr. Adesanya of Morningstar DBRS believes it is unlikely that the price of electric vehicle insurance premiums will completely stabilize within a decade.

It's a short time frame, he says, adding that insurers will need a lot of claims data to adequately set their rates.

For its part, the Insurance Bureau of Canada, which represents the industry, fears that provincial governments will cap price increases so as not to slow down the purchase of electric vehicles.

If [insurers] can't charge appropriate prices, you essentially create a bubble where repair costs pile up in the system, says de Pruis.

According to him, too much government intervention could encourage insurers to pass the bill on to drivers of combustion vehicles, an opinion shared by Mr. Adesanya.

It is possible that indirectly [other drivers] subsidize insurance for electric vehicles, he believes.

Until the market has stabilized, Morningstar DBRS expert invites electric vehicle buyers to request an estimate from several insurers , since premiums can vary considerably.

For the moment, Mr. Vassalle agrees to pay more to insure his Tesla Model 3 car.

It's a big toy, says the motorist. But it's true that insurance is very expensive, and I think that generally discourages people from buying electric cars.

With information from Philippe de Montigny

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