The eventual transition to electric vehicles seems inevitable, but there are a lot of unknowns to be worked out in the meantime, by consumers and even by the auto industry and related industries, like insurance.
The New York-based company, and many of its competitors, are introducing extended-service contracts and similar “protection” products aimed specifically at electric vehicles and gasoline-electric hybrids.
Extended service contracts are designed to cover components and systems not covered by the original-equipment manufacturer’s warranty, and-or beyond the term of the OEM warranty.
To forecast future claims, and to price accordingly, insurers rely on mountains of data on past performance. Data on electric vehicles is starting to pile up, Jenns says, but it’s nothing to compare with the data available on cars equipped with internal-combustion engines — often abbreviated as “ICE” nowadays.
“ICE engines have been around since the early 20th Century in some form or another, whereas EVs, as we think about them in the modern era, have been around, arguably, just since the early part of this century,” Jenns said in a phone interview.
Anecdotally, he says the batteries in exclusively battery-powered electric vehicles appear to be quite durable, but that’s based in part on experience with how long batteries last in gasoline-electric hybrids.
“If you’ve been in a taxi lately — or maybe it would have been pre-COVID — it’s likely you’ve ridden in a Toyota Prius. When I’m in one I always ask, ‘How many miles do you have on this vehicle?’ It’s not unusual to hear 300,000 or 400,000 miles,” he says, which consumers should find reassuring.
“We’ve got some empirical data that says these things are pretty doggone reliable,” he says.
While a lot of attention is focused on differences in the powertrain — that is, the engine and transmission — there are other, significant differences between BEVs, short for battery-powered electric vehicles, and ICE vehicles, Jenns says.
For example, the electronics systems in BEVs tend to be more complex, and therefore more expensive to replace if there’s a failure. “The areas to protect are really around the electronics and the driver-assist systems. That’s not to say there aren’t drivetrain failures, certainly, but we don’t see that frequency being quite as high,” he says.
For now, there’s an understandable level of uncertainty around the technology. That makes it tough for insurers to predict how systems will perform in the long run, but the uncertainty probably also makes consumers want products like service contracts, Jenns says.
He says, “The big variable here that would drive consumer behavior in a direction to be predisposed to by some sort of protection on the vehicle comes from uncertainty.”