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China’s new electric cars are more expensive to insure than fuel-powered cars

China's new electric cars are more expensive to insure than fuel-powered cars
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In China, new energy vehicles are often given a green plate – which is often easier for residents to apply for than the blue plate of a conventional fuel-powered car.

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BEIJING — While Chinese companies are building new electric cars, local insurance companies find them more expensive to cover.

Wenwen Chen, director of S&P Global Ratings, said that overall, the insurance premium for new-energy cars, including electric, is about 20% higher than for cars running on comparable conventional fuels. .

There are many factors that determine pricing. But Chen said he found that insurance companies found that the loss rate, a cost measure for insurance companies, tended to be higher for new energy vehicles than for internal combustion engine vehicles.

One of the main reasons he cites for a higher loss rate is more accidents, especially those that cost more – because new energy vehicles often use parts that have not yet been mass produced.

According to Chase Gardner of Insurify, electric car insurance in the US tends to be about 15% more expensive than cars with internal combustion engines. United States

But repair costs are another reason for higher insurance prices, as “less places in the U.S. have the ability to service electric cars,” Gardner said. “Often people who use EVs pay lower maintenance costs over time. Again, the big question is, would you have an accident?”

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In the US, Insurify’s analysis of the US market, no difference in accident rates between electric cars, hybrids and internal combustion engine cars.

However, according to official Chinese statistics, new energy vehicles in the country are more prone to fire than conventional fuel vehicles. In the first quarter, 640 new energy vehicles reported 32% more fires than a year ago. Ministry of Emergency Management, Fire and Rescue Department.

The ministry said this increase was much more than the 8.8% increase in fires for transportation vehicles in general. More recent figures were not available. The ministry did not respond to CNBC’s request for comment.

The ministry has reported at least 3,000 new energy vehicle fires for the full year 2021. He said the fire risk for such cars is generally higher than for conventional vehicles, without disclosing specific figures.

The increasing number of fires comes with the increasing number of new energy vehicles in China.

From January to August, 3.26 million new powered passenger cars sold – More than double the same period last year, and about 25% of all passenger cars sold in the country, according to the China Passenger Car Association. This share was around 15 percent last year.

In contrast, new energy vehicles remain a much smaller part of the US auto market.

In the fourth quarter of 2021, hybrid, plug-in hybrid and electric vehicles accounted for 11% of light commercial vehicle sales in the USA. In a statement from the U.S. Energy Information Administration,, with reference to data from Wards Intelligence. A more recent report was not available. Light-duty vehicles also include pickup trucks and pickup trucks.

The rise of new cars

Home to the world’s largest auto market, China has supported growth in new energy vehicles with policies that make it easier to get license plates and policies that subsidize purchases.

In the first seven months of this year, tax exemptions for new-energy vehicle purchases totaled 40.68 billion yuan ($5.9 billion), compared to more than $1 billion in July alone, according to official figures. The tax administration said both amounts were excessive. twice as much as a year ago.

Many Chinese companies have rushed to launch new energy vehicles, although it is unclear what the specific accident risks are.

Cui Dongshu, general secretary of the China Passenger Vehicle Association, said that new energy vehicles tend to be simpler than internal combustion vehicles, especially in design.

Electric cars are based on a platform system and could be faster to certify safety, he said, noting the potential use of virtual test scenarios or the ability to test individual parts.

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In less than a year, Chinese telecommunications and smartphone giant Huawei has partnered with automaker Seres to launch three new energy vehicles under the Aito brand. Cars are the first to use Huawei’s HarmonyOS operating system.

At a launch event in July, Richard Yu, CEO of Huawei Consumer Business Group, praised how quickly his team and Seres were able to run a large number of vehicle safety tests in such a short time, developing and launching two models in a little over a year.

“In a hundred years of the automotive industry, there is no record of anyone doing it this fast before,” Yu said in Mandarin translated by CNBC.

Two of the three cars have already reached consumers. Deliveries of the first model reached 10,000 units in just 87 days, Huawei claimed in August – an industry record for a new car brand.

Helen Chai, consulting director of China Insights Consultancy, said it typically takes three to four years to manufacture and develop a car. He said that if the car is based on an existing model, a new model will only last two to three years.

He said the steps to develop and certify a new energy vehicle and an internal combustion engine car are often the same.

Other local players are quickly launching new models, but especially tesla does not have.

For example, in the last 12 months, No It began deliveries of its first electric sedan, a second sedan was launched – and a new SUV was launched and delivered.

Last year, Baidu and Geely announced the launch of their joint electric car project, Jidu. Next year, the first Jidu car set to begin customer deliveries.

Huawei did not comment. Nio and Jidu did not respond to CNBC’s request for comment.

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