The Takeaways:
- Tesla has recently recalled 362,758 vehicles for flaws with its “full self-driving” software.
- Risks of battery safety, cyber vulnerabilities, and high cost of entry, these are the three commonly listed barriers, to which I would add two more: software immaturity and high maintenance and insurance costs.
- This is not discouraging the purchase of EVs, as I have faith in the new technology, just a friendly reminder that EVs are not perfect but will get better and safer as we speak.
The Good & Bad News for Tesla
All new vehicle sales in California last year dipped 10% (nationwide it dropped by 7.9%). Yet the hybrid market share continues to steadily grow, the report from the California New Car Dealers Association shows. The California hybrid/EV market share was 31.1 % last year, according to the association.
Yet on February 16, 2023, news had it that “Tesla is recalling 362,758 vehicles because a version of its “full self-driving” software may increase the risk of crashes, according to the National Highway Traffic Safety Administration in response to a notice Tesla sent the agency on Wednesday.”
More specifically, the full self-driving software may cause the vehicles to travel “straight through an intersection while in a turn-only lane, [enter] a stop sign-controlled intersection without coming to a complete stop, or [proceed] into an intersection during a steady yellow traffic signal without due caution.” In addition, “the system may not respond sufficiently to changes in posted speed limits, or not adequately account for the driver’s adjustment of the vehicle’s speed to exceed posted speed limits.”
The recall affects 2016-2023 Model S and Model X vehicles; 2017-2023 Model 3 vehicles; and 2020-2023 Model Y vehicles.
General Risks with EV
As with any mode of transportation, there are risks associated with owning an electric vehicle. One risk highlighted by an article in Forbes is battery safety. While electric vehicle batteries are generally safe, there are still potential risks that owners should be aware of, such as thermal runaway and fire hazards. It’s recommended that owners follow smart everyday battery safety practices to mitigate these risks.
As this article of Insurance Journal points out in November 2022, “A key concern with EVs is fire from lithium batteries.” Most of us have had the experience that when you get to the airports, one of the first things at the safety check-in spot was to take out your lithium batteries from your electronic devices. This is because the spontaneous fire exposure risks that first-generation lithium batteries presented.
But what you may not be aware of is risk associated with the growing number of E-bikes.
“The National Law Review recently published a warning of a ‘recent surge in electric bike fire in New York City,’ listing four causes of fires from the lithium batteries in E-bikes: design flaws; battery damage; exposure to heat; and use of the wrong charger. Storing and charging electric bikes and scooters in homes and apartments thus exposes occupants to a potential severe fire risk.”
“In the last 18 months, there were over two dozen lithium fires investigated in New York City public housing buildings. The increased frequency and severity of scooter and E-bike fires has led the New York City Housing Authority to consider a ban of these vehicles in public housing.”
But E-bike fire hazard is no comparison with that of EVs, because “(t)he size of the batteries in EVs, as well as the combustible materials that make up the automobile, provide both a fuel source and source of ignition.” It’s like putting matches next to a heap of explosions — although I’m sure precautious steps and designs have taken that into account by now.
Furthermore, the Insurance Journal article tells us that EV fires “can be very difficult to extinguish, and water can have little firefighting impact. Vehicles have been observed in some cases to reignite after they have been towed away.”
Things that can be done by EV owners include parking EV away from combustible structures or other vehicles, especially when charging. If an EV is in an accident, an immediate inspection of its electrical system and batteries is necessary and highly recommended. Any impact could damage the battery and/or electrical system, leaving the EV more vulnerable to ignition.
A Surprising Risk with EV
Another risk associated with electric vehicles is cyber vulnerabilities. Many owners perhaps do not realize this, but it is true. As electric vehicles become increasingly connected, they become more susceptible to cyber-attacks, system outages, and other issues. There have already been product recalls in the automotive sector as a result of cyber security issues. This could also have implications for insurance claims, as the complexity of these issues could make it difficult to determine liability.
A Financial Risk
Finally, one of the present-day disadvantages of electric cars is their cost. Electric vehicles are generally more expensive than traditional gasoline vehicles, largely due to the cost of the battery. Modern batteries require lithium, which can only be mined in a handful of countries, leading to potential supply chain issues that could drive up the cost of electric vehicles. This high cost could be a risk for some potential owners who may not be able to afford the prohibitive entry price of electric cars.
An Insurance Headache?
This report by Insurance Journal brings another risk to our attention: the cost to repair. A new report “shows sales of electric vehicles in California rose by more than 50% last year from 2021 with an estimated increase in market share of 17.1%.”
Even in California, EVs are still relatively few, which means scarcity of replacement parts. Both push up repair costs.
The most recent data on EV claim frequency and severity from 2020 shows the frequency of crashes tend to be lower because of the advanced driver-assistance features included in most of these new vehicles. However, the figures show collision severity is higher.
A report from Verisk last year shows the cost of insuring electric vehicles tends to be higher than gas-powered vehicles.
Mercury Insurance, a large California auto insurer, reports EV repair costs can be nearly 20% higher than the average vehicle repair cost on first-party coverages, such as collision.
“EVs are full of technologies that go beyond simple auto maintenance and repair,” said Justin Yoshizawa, Mercury’s director of product management. “So many of these features – like self-driving, safety, entertainment and comfort tech – are unfamiliar ground to many technicians and, even with familiarity, more time is required to evaluate and address potential issues with such features. It makes EVs costly to repair. And that’s not even taking into account the ongoing constraints of supply chain issues and labor.”