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Tesla EVs, Even Mildly Damaged, Being Written Off by Insurers


Tesla EVs, Even Mildly Damaged, Being Written Off by Insurers

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Tesla EVs, Even Mildly Damaged, Being Written Off by Insurers

  • There were 120 Tesla Model Y electric vehicles listed in two major salvage auction houses recently, and “most” had under 10,000 miles, according to a report from the Reuters news service.
  • The insurance company covering this vehicle decided that even with a few miles on it, this Tesla was not worth the $50,000 or more it would sometimes cost to repair.
  • The cost of repairing cars has risen as facilities have declined over the years, which has prompted talk of so-called Right to Repair laws, which would give owners more rights to fix what they buy.

Right-to-repair laws are starting to gain some traction, giving customers more rights to fix the products they buy. But just because you can fix something doesn’t mean it will be easy or affordable. Fixing your own car has become less common over the years, but at least a local mechanic can help. . . often. When it comes to Tesla’s electric vehicles, though, some insurance companies have reportedly decided that even low-mileage vehicles aren’t worth the hassle.

Owners of certain automotive brands know that expensive repair bills come with the territory. But that doesn’t mean insurers want to play the game, and some of them are increasingly deciding to write off Tesla’s low-mileage electric vehicles because they’re too expensive to fix, according to a new report from Reuters.

2020 tesla model y

Reuters looked at recent salvage auction listings and found that “the vast majority” of the 120 Model Y vehicles listed had less than 10,000 miles on them. Although this EV originally cost between around $60,000 and $80,000, high repair costs will keep it off the road in the future, despite its low odometer reading. The $61,000 2022 Model Y Long Range EV, for example, suffered a frontal collision and would cost more than $50,000 to repair if the insurance company approved the repair. Reuters could not determine the type of incident that caused the damage in this case but noted that several well-known insurance brands, including State Farm, Geico and Progressive, all decided that repairs were not made.

Insurance Bill up to 30 Percent Higher

It’s not like people don’t pay to insure their Teslas. In late 2022, Nerdwallet reports that the average Tesla owner with a good driving history and good credit can expect to pay about $2040 a year for a Model Y and as much as $3044 for a Model X. The average cost to insure a Model 3 is nearly 30 percent more higher than the national average for car insurance, says Nerdwallet.

Exactly how much it costs to repair the average Tesla after an incident compared to other vehicles, both electric and ICE models, is difficult to measure, but Tesla has long recognized that insurance costs for its EVs are not in line with average costs for the industry. Tesla began offering its own insurance policy for customers in late 2019, promising that it would cut costs for Tesla drivers. Customers can certainly benefit from lower costs. As a story from The Drive showed in 2021, a Tesla service center quoted a Model 3 owner $16,000 to fix a battery pack coolant leak after it was damaged by road debris. An independent mechanic was able to fix the issue for $700, and The Drive argues that the story proves that Right to Repair is an important issue for EVs.

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Tesla Model 3.

Chris Doane|Car and Driver

For its part, Tesla’s insurance side business is now helping the automaker lower future repair costs, according to company executives. “[Tesla insurance] also gives us a good feedback loop to minimize Tesla’s repair costs—for all Teslas around the world—because we obviously want to minimize Tesla’s repair costs if it’s in a collision,” CEO Elon Musk said during a recent earnings call, according to Teslarati. “Before, we didn’t really have a good view of that because other insurance companies would cover the cost. And in fact, the costs in some cases are unreasonably high.”

Tesla is using its insurance arm to make changes in the way it designs its vehicles, Musk said during the call, according to Reuters. “It’s amazing how little changes there are in the bumper design [and] providing the parts needed for collision repair has a big impact on repair costs,” he said. “Most accidents are actually minor – a broken fender or a scratched side of the car.”

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