Not all EVs are created equal in the eyes of insurance and buyers should consider upfront costs as well as repair costs when buying a new vehicle
LOS ANGELES, June 29, 2023 /PRNewswire/ — Battery electric vehicles (EVs) have gained popularity in recent years with market share rising from a low single digit to 8% of new vehicle sales in the first quarter of 2023. Propelling this growth are more available EV products being chased by more buyers looking to enjoy the cost efficiencies EVs promise. As consideration grows for EVs, Mercury Insurance (NYSE: MCY) has some advice on the insurance implications between EVs and Internal Combustion Engine vehicles (ICEs), an important factor in the “total cost of ownership” equation.
“A vehicle’s cost goes beyond the purchase price. What we’re finding is that the added technology in EVs that make them appealing is also making some of them more expensive to repair,” said Chong Gao, Mercury Insurance Director of Research & Development. “Mercury has been named as one of the most affordable insurers of EVs in the marketplace because of our focus on researching and understanding the subject of EV cost and repair. We strongly advise consumers to do the same as they consider investing in this new category of transportation.”
Chong advises that the best way to determine whether to purchase an EV or ICE vehicle is to look at the entire picture – the “total cost of ownership.” Insurance premiums are an important factor. Buyers need to research the manufacturer’s suggested retail price (MSRP), fuel economy, repair costs, necessary infrastructure for home charging and other factors before making a decision.
Chong gives three examples of how the total cost of ownership might come into play:
- Going electric costs more to insure: The Chevrolet Bolt EV is a small, electric hatchback starting at $26,500 and has a range of about 259 miles[1]. A comparable ICE vehicle, such as the Chevrolet Trax, comes in at $20,400. The Trax has a 14 gallon gas tank, and returns a combined fuel economy of 30 mpg[2] – which translates to roughly 420 miles on a tank. The Trax is 73% as expensive to insure as the Bolt.
- Savings get a charge: The Nissan LEAF is a small, electric hatchback that starts at an MSRP of $28,040, and an EPA-estimated range of 212 miles[3]. The closest match from Nissan is the compact Sentra sedan which starts at $20,050. The Sentra’s combined fuel economy is 33 mpg with a 12.4 gallon tank[4], which gives drivers around 409.2 miles between fill-ups. The price difference of $7,990 and nearly double the driving range make this a close comparison. The cost to insure the Sentra is 115% the costs of the electric LEAF.
- Comparing apples to apples: The 2023 Volvo XC40 mild-hybrid and its EV counterpart, the XC40 Recharge, have the exact same insurance costs. The ICE version of this vehicle has a MSRP of $36,350 while the EV version starts at $53,550 – a difference of $17,200. The mild-hybrid version gets 26 mpg in combined city/highway driving, with a 14.2 gallon fuel tank[5], which should give drivers a range of about 369 miles. The Recharge model has a 223 mile range[6].
Gas prices vary by location, and public charging can be a bit erratic in these early days. EV owners who are also homeowners can opt to install their own chargers, but they can be expensive when you include installation costs.
When the time comes to shop for the next new vehicle, Mercury Insurance experts recommend considering all aspects of your purchase. Factor in the MSRP, the driving range and what’s needed in order to optimize your experience. A more knowledgeable understanding of the total cost will reduce surprises and make for a more positive ownership experience.
About Mercury Insurance
Mercury Insurance (NYSE: MCY) is a multiple-line insurance carrier predominantly offering personal auto, homeowners and renters insurance through a network of independent agents in Arizona, California, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas and Virginia, as well as auto insurance in Florida. Mercury writes other lines of insurance in various states, including commercial, business owners and business auto, landlord, home-sharing, ride-hailing and mechanical protection insurance.
Since 1962, Mercury has provided customers with tremendous value for their insurance dollar by pairing ultracompetitive rates with excellent customer service. Mercury has earned “A” ratings from A.M. Best and Fitch, as well as “Best Auto Insurance Company” designations from Forbes and Insure.com. For more information visit www.MercuryInsurance.com or follow the company on Twitter or Facebook.
[1] https://www.chevrolet.com/electric/bolt-ev
[2] https://www.chevrolet.com/suvs/trax
[3] https://www.nissanusa.com/vehicles/electric-cars/leaf.html
[4] https://www.nissanusa.com/vehicles/cars/sentra.html
[5] https://www.volvocars.com/us/cars/xc40/
[6] https://www.volvocars.com/us/cars/xc40-electric/
SOURCE Mercury Insurance
