Australia’s Electric Vehicle Market Experiences Record Growth
The Australian automobile industry is witnessing unprecedented growth in electric vehicle (EV) sales, with the Australian Automobile Association’s (AAA’s) EV Index indicating that the country is on track to reach 100,000 annual EV sales in 2024. According to the Electric Vehicle Council, over 30,000 EVs were sold during the second quarter of the year, marking the first time this milestone has been achieved.
“These sales figures are without precedent, which is extremely encouraging given the broader economic pressures with high interest rates and the cost-of-living limiting people’s ability to purchase new cars,” said Samantha Johnson, CEO of the Electric Vehicle Council. The surge in EV sales can be attributed to rising fuel costs, environmental concerns, and an increasing number of appealing EV models available in the market.
The NRMA reports that there are currently 31 car brands selling EVs in Australia, with expectations to have over 120 models available by next year, matching the UK’s current offerings. However, the growing popularity of EVs also brings new insurance challenges, particularly related to cost-driven factors.
Insurance Industry Adapts to EV Challenges
Parts of the insurance industry are responding to these challenges by offering EV-focused coverages and telematics-based insurance products. In July, Zurich Australia announced a partnership with Tesla, becoming the “preferred” insurer for Tesla’s EVs in Australia. KOBA Insurance launched a telematics-based insurance product for EVs in March, leveraging new technology and data to create more granular pricing models.
“For the most part, insurance is [still] built around who you are,” said Andrew Wong, CEO of KOBA Insurance. “So your age, gender, where you live, who’s driving the car, the value of the car itself and your past claims history.” Wong noted that telematics data is starting to impact premium prices by providing driver risk assessments.
Addressing EV-Specific Insurance Issues
EVs present unique insurance challenges, including higher parts costs and longer repair times. Luke Kelly, director of Fuse Fleet Underwriting, advised brokers and fleet managers to consider the cost and availability of parts, particularly lithium-ion batteries, when selecting EV models. The position of charging ports on some EV models has also been suggested as a potential insurance issue, as they can be expensive to repair if damaged.
Andrew Wong noted that oversized windscreens in some EV models, such as certain Tesla models, can significantly increase insurance costs due to their size and advanced technology. “The frequency of those types of repairs are higher,” Wong said, highlighting the impact on risk calculations and premiums.
Battery Fires and EV Risk Assessment
While battery fires are a concern, the number of incidents related to car batteries is very small. Wong emphasized the importance of distinguishing between car fires and battery fires, noting that there have been fewer than 10 car battery fires in Australia since EV adoption began nearly a decade ago.
As the EV market continues to grow, the insurance industry must adapt to new challenges and develop more sophisticated risk assessment models to address the unique characteristics of electric vehicles.
