Are Rising Insurance Rates Putting The Brakes On The EV Revolution?

Will Increased Insurance Costs Derail The EV Revolution? Here are some of the reasons to consider, why it might. If you remember that car-carrier ship that caught fire and sank in the ocean in early 2022? The Felicity Ace, operated by Mitsui OSK Lines, that took 3,000 Porsches, Audis, Bentleys, and Lamborghinis to the bottom of the Atlantic.

As of recent, Mitsui OSK Lines has filed a lawsuit against Porsche seeking 30 Million Euros in damages, blaming the fire on the lithium battery in one of their electric vehicles. Of course this will never be reported on the main stream media.

498 electric vehicles and over 3,200 other vehicles, including 350 Mercedes Benz, were bound for Egypt on the Fremantle Highway when one or more of the EVs caught fire, costing at least one seaman his life, and injuring several others. Curiously, the Dutch coast guard had initially reported that only 25 of the vehicles were battery-electric models.

At last report, the Dutch coast guard admitted that it has been unable to put out the fire and that the ship has taken on water and is “listing” and on a trajectory toward a capsize. Should the ship sink, the total loss would also threaten the Frisian island of Ameland, part of a UNESCO World Heritage Site that is home to over 10,000 aquatic and terrestrial species and located near one of the world’s most important migratory-bird habitats.

On a global scale, 3,000 vehicles are but a drop in the bucket, and in insurance terms, the loss of one 18,500–ton transport ship and one human life is only so much. We also want to note that all the wounded are expected to survive, despite broken bones, burns, and respiratory problems. To compute a total cost, the ecological devastation would also have to be factored in, along with the cost of rescue, firefighting, and salvage operations.

But all in all, this was a freak accident, a one-off. This stuff never happens… Right?

There have been more cargo ships with electric cars on board catching fire lately, we have more details about the most recent cargo ship carrying nearly 3,000 cars that caught fire off the coast of the Netherlands, while traveling from Germany to Egypt. Almost one in seven cars on the blazing cargo ship are electric. 

Last year, the “Felicity Ace” sank as it was being towed from the site where 13 days earlier a fire had broken out on board. That ship, too, was transporting EVs and internal-combustion vehicles – including 15 Lamborghini Aventador supercars valued at half a million dollars apiece. Also lost were 1,117 Porches, 1,944 Audis, 561 Volkswagens, 189 Bentleys, and 70 other Lamborghinis. Total damage costs for all the vehicles have been estimated at about 335 million dollars. 

Recently, two firefighters died battling flames that broke out on another roll-on, roll-off cargo ship docked at Port Newark in New Jersey. Firefighters arrived at the scene when just five to seven vehicles on the 10th floor of the ship were on fire, but the fire quickly spread to the 11th and 12th floors. 

Why does this matter? The cargo ship is one of several that have caught fire and burned over the past year. While this could result in a major environmental disaster if the ship sinks, firefighters and salvage crews are working to keep it afloat and extinguish the fire so it can be brought into a facility for reclamation. The International Maritime Organization plans to evaluate new measures for ships transporting electric vehicles in light of the growing number of fires on cargo ships

The port authority assured reporters that no EVs numbered among the 5,000 vehicles (bound for Africa) on board, but just imagine if the fire had begun with the ship far out at sea. Or imagine the horror should an EV fire break out on a ferry boat carrying hundreds of vehicles and thousands of passengers? Or in an underground parking garage in a New York high-rise? Automakers have largely replaced steel and metal with plastic, and a huge fire could unleash immeasurable quantities of synthetic chemicals into the atmosphere from the burning plastic. A total capsize would send millions of pounds of debris and spilled motor oil (from the non-EV autos) to the sea floor along with any toxic flame retardants. The impact on sensitive marine life would not be known for years. 

But let’s look at the bigger picture. Massive fires are not the only insurance concern with EVs. The New York Times recently reported the sad story of a Rivian owner whose electric pickup truck was involved in what would normally be considered “a minor fender bender.” The owner’s insurance company gladly offered to pay about $1,600 for the repairs, but the certified repair shop produced a bill for $42,000; about half the cost of the vehicle. This is because of the way they are constructed with the part of the chassis housing the battery being an integral piece of the structure.

Insurance companies are having to write off EVs with just a few miles if damaged. This is leading to higher premiums because of the many EVs for which there is no way to repair or assess even slightly damaged battery packs after accidents. EVs, according to Consumer Reports, may not withstand an accident as well as traditional gasoline-powered vehicles. EV batteries are vulnerable to damage, and with any indication of a compromised battery, insurance companies will likely declare an EV crash a total loss. This puts those EVs and their batteries in junkyards to degrade over time and hopefully not leak the chemicals or catch fire.

The higher costs for auto insurance only add to the already-higher costs of purchasing an EV, then procuring a personal charging station and spending more money to upgrade home wiring boxes especially for older homes. 

As automakers continue to lose money on EVs and consumers worldwide continue to prefer the vehicles they have learned to trust over decades, will EV mandates fall by the wayside. We shall see what buyers want and if they are willing to switch or not.

New safety protocols are now in place at ship yards in case of a yard fire. However, the cost to insure electric cars continues to rise for multiple reasons. When insurance companies set their rates, they’ll look at claims that have been paid for similar cars, among other things, and set their prices. It comes as all motorists face soaring insurance costs, with prices said to be at an all-time high.

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