- A new study finds that EVs cost 49% more than gas-powered cars to insure
- In some states, the figure is much higher or lower
Electric vehicle (EV) prices continue to fall, dropping 2.2% in just the past month.
That decrease is likely temporary, as dealers prepare for the federal government’s $7,500 EV tax incentive to disappear this fall. However, industry insiders say EV prices will continue to fall over time as automakers build more of them.
Electricity costs less than gasoline. EVs also promise lower cost-of-ownership than gas-powered cars in the long run, thanks to much lighter maintenance needs.
Related: How to Estimate Car Insurance Costs Before Buying
But going electric remains expensive in one crucial area. A new study shows that EV owners pay far more to insure their cars than owners of gas-powered vehicles do.
The data come from Insurify, an insurance comparison shopping service. Their researchers examined more than 97 million insurance quotes for the study.
They found that “EV drivers face an average insurance cost of $4,058 per year. By comparison, the average cost to insure a gas-powered vehicle is $2,732.”
Higher Repair Costs to Blame
- EVs cost more to repair, in part because they’re still rare enough that parts aren’t common
- Tesla uses construction methods that make repairs more expensive
“The higher cost of repairing and replacing EVs can account for much of that difference, since premiums reflect the risk and expense of paying out claims,” the researchers write.
That will likely come down over time as EVs grow more common. EVs remain a tiny percentage of cars on American roads. Kelley Blue Book parent company Cox Automotive estimates that, by the end of 2025, 8.5% of new car sales in the U.S. could be electric. With the average car now nearly 13 years old, it could be decades before EVs outnumber gas-powered vehicles.
Related: Report — Tesla Insurance Costs Rising Fast
That leaves little market for repair parts, keeping repair costs higher.
However, some EVs cost much more than others to repair. Insurify notes, “Tesla’s EVs are the most popular, but they’re also the most expensive to insure.”
Tesla’s vehicle architecture uses the battery as a structural part of the car, meaning even minor collisions can require an expensive battery replacement. Most rivals now build modular batteries that can be repaired without replacement.
Difference Stark in Some States
- The cost difference between insurance for an EV and a gas-powered car was as high as 99% in some states
- But it’s as low as 15% in others
EV adoption rates differ sharply between states. EV insurance tends to be more affordable in states where electric cars are common.
“Fewer EVs in an area means less experience with how much claims will cost. To protect themselves, insurers estimate costs will be high and set premiums accordingly,” the researchers explain.
The cost difference was most severe in Alabama and Pennsylvania, where insuring an EV costs 99% more than insuring a comparable gas-powered car. It was lowest in New Jersey, at just 15%.
