EV collision costs aren't as uncompetitive as they look

Collision repair costs for Tesla models remain significantly higher than for combustion vehicles, but electric vehicles without the Tesla logo are near parity with gasoline cars, according to third-quarter data from Mitchell.

Average repair costs were $5,552 for Teslas, $4,474 for non-Tesla EVs and $4,205 for combustion vehicles in the quarter, the data shows. That means Teslas were higher than gasoline cars by $1,347 while non-Tesla EVs were just $269 higher than combustion engine vehicles, said Mitchell, which provides software for managing collision repairs.

Part of Tesla's higher collision costs comes from its safety and technology features that are spreading across the industry, pushing repair bills and insurance premiums higher, especially in the luxury category.

"These vehicles are on the cutting edge of all this safety technology and this digital connected-car technology, and all of that is going to play a role when these vehicles are involved in a collision," said Ryan Mandell, director of claims performance for auto physical damage at Mitchell.

"You could have a left-front corner impact that somehow has disrupted your right rear lane-departure warning sensor," Mandell told sister publication Automotive News. "Maybe that part needs to be replaced, maybe it needs to be recalibrated."

Mitchell's data comes from vehicle repair costs uploaded to its software platform, which collision repair shops use to manage their business. Mitchell's platform is used by about 25 percent of shops in the U.S., Mandell said.

Teslas are among the most expensive brands to insure, according to a September analysis by MarketWatch Guides. Full coverage for a 2022 Tesla model averaged $251 per month, 74 percent above the U.S. average. The analysis was based on data from Quadrant Information Services for a 35-year-old driver with a clean driving record.

For EVs as a group, including Teslas, the average repair cost was $5,155, or $950 more than gasoline cars, Mitchell said. That has fallen since the third quarter of 2022, when the average repair cost was $6,270, according to Mitchell. Likely reasons include an increase in sales of mainstream EVs and deep price cuts by Tesla, Mandell said. Vehicles with lower replacement costs are more likely to be declared a total loss rather than undergoing expensive repairs, bringing down the average repair cost in the data.

The gap in repair costs between EVs and combustion vehicles is often exaggerated by social media posts that focus on rare battery fires and extreme cases rather than industry averages, analysts said.

The example of a Rivian R1T pickup with a $42,000 repair bill over the summer is a good illustration of an edge case gone viral. A rear-end collision that didn't look severe on the outside caused serious damage on the inside.

"I think that a $42,000 repair is a good click on the Internet," said Mandell. "I think these anecdotal stories kind of get blown out of proportion a little bit, and you start to see so much focus on one-off stories as opposed to the overall trend."

Another part of the reason for higher repair costs on EVs is that they are newer and pricier than gasoline vehicles on the road.

The average combustion vehicle is a 2016 model, whereas the average EV is a 2022, Mandell said. Most EVs are luxury vehicles, in part because Tesla dominates both the luxury and EV segments in the U.S.

Comparing similar vehicle types and model years closes the repair-cost gap between EVs and gasoline vehicles.

Repairing a Tesla Model 3 sedan is more expensive than fixing a gasoline engine BMW 3 Series or Mercedes-Benz C-Class of the same model year, but only by a small percentage on average, Mandell said.

That said, pricey EVs from automotive startups are generating outsized repair bills. Mandell said the average cost of repairing a Rivian is around $8,000, and Polestar and Lucid cars are even higher.

But the trend for all vehicles, EVs and combustion, is toward higher costs and higher insurance premiums.

"In the past with a fender bender, you could have repaired it with a hammer and banged it out," said Tony Cotto, director of auto and underwriting policy at the National Association of Mutual Insurance Cos., a trade association. "Now, all of the sudden, when you factor in cameras and connected technology, where pieces are connected to one another, that's going from banging out a dent to a multi-thousand-dollar repair."

Cotto said the insurance industry supports driver-assistance technology, backup cameras and other tech features that make vehicles safer. But "all of those things cost money" to buy and to repair.

Mandell said new vehicles are being transformed with more parts and new materials, requiring higher-skilled technicians and more labor hours.

"When you look at the average number of parts being replaced, it's increasing every year. You look at the frequency of calibration work — that's increasing by the day. You look at the number of parts that are other than mild steel, that increases continually," he said. "All of these trends are leading us toward more expensive collision repair."

One added labor cost for EVs over combustion vehicles is the time required to isolate the battery pack.

Sometimes that means de-energizing it to prevent injuries to technicians. And sometimes that means removing the pack to protect it, since some painting operations cannot be completed with the pack installed, depending on the manufacturer, Mandell said.

But battery repairs or replacements following a collision are uncommon.

"We don't see estimates come in with a high frequency that have replacement of the high-voltage battery or indicate damage," Mandell said. "Does it happen? Absolutely."

Damage to the pack can occur in a severe accident or in specific sets of circumstances. But generally, Mandell said, automakers "do a good job of protecting the battery."

Over time, Mandell said, EV manufacturers will likely improve repairability through design changes to make the vehicles less expensive to fix since repair time and cost can negatively affect brand satisfaction.

"As new vehicles come into the marketplace and are getting repaired in real life, you start to run into real challenges," Mandell said. "As those challenges are addressed and brought to the manufacturer's attention, you'll start to see changes in engineering based on that real-world feedback."