Tesla EVs Are So Expensive to Repair, Insurance Companies Are Just Writing Them Off

Tesla’s (Nasdaq: TSLA) electric vehicles are so expensive to repair that insurers are writing them off even with fewer than 10,000 miles on them.

Reuters analyzed data from the United States’ two largest salvage auction houses, Copart and IAA, and found 120 Model Ys totaled after collisions listed at auction in December and early January, with a vast majority of the vehicles having fewer than 10,000 miles on the odometer.

The cars, which were 2022 or 2023 models built either at the Fremont plant in Northern California or the Austin, Texas plant, originally cost from $60,000 to more than $80,000. Reuters found that the estimated cost of repairs goes as high as over 80% of the vehicle’s retail cost.

And insurers typically write off or “total” a vehicle when repairing it isn’t economically feasible. In cases like this, insurers will reimburse the owner the cost, and then sell the vehicle for its scrap value or auction it off as salvage.

The auction listings Reuters studied indicate whether the vehicles have been in front, rear, or side collisions and include after-crash photos, but do not disclose details on the extent of the damage. 

One vehicle, a 2022 Model Y Long Range involved in a front collision and listed in early January by IAA, showed a retail price of $61,388 and an estimated repair cost of $50,388. Another Model Y, this one involved in a side collision, had a retail price of $72,667 and an estimated repair cost of $43,814.

The listings on Copart sometimes included the names of the insurer, and Reuters saw the likes of State Farm, Geico, Progressive, and Farmers writing off Teslas.

Tesla drivers aren’t just facing the high costs of repairs, they’re also paying higher insurance premiums. The average cost to insure a Model 3 for a good driver with good credit, for example, could be as much as 30% higher than the national average for car insurance according to NerdWallet

Forbes Advisor compiled the average annual premium for Model 3, below is the table for the average cost by company.

To help with the high costs, Tesla launched its own insurance affiliate in 2019 and promised rates as much as 30% cheaper than other insurers. The business is also reportedly helping the electric carmaker understand how they can manage the high cost of repairs. 

Tesla insurance “is also giving us a good feedback loop into minimizing the cost of repair of Teslas—for all Teslas worldwide—because we obviously want to minimize the cost of repairing a Tesla if it’s in a collision,” CEO Elon Musk said during a recent earnings call. “Previously, we didn’t actually have good insight into that because the other insurance companies would cover the cost. And actually, the costs in some cases were unreasonably high.”

Musk also said that the company wants to minimize the costs of repairing Teslas that have been involved in collisions. 

“It’s remarkable how small changes in the design of the bumper (and) providing spare parts needed for collision repair have an enormous effect on the repair cost,” he said. “Most accidents are actually small — a broken fender or scratched side of the car.”


Information for this story was found via Reuters, Forbes, Car and Driver, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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