EVs Offer Lower Operating Costs Compared
With ICE and Hybrid Vehicles, but Cost More to Insure
LOS
ANGELES, Sept. 23, 2024 /PRNewswire/ -- With a
variety of powertrain options on the market, consumers who are
shopping for a new vehicle have a lot to mull over these days. Buy
another internal combustion engine (ICE) vehicle? Go fully
electric? What about a hybrid? Regardless of vehicle type, it's
important for shoppers to understand the total cost of ownership
before making a commitment, as this will help minimize unexpected
expenses and headaches down the road.
"The 'total cost of ownership' equation includes factors like
insurance premiums, fuel efficiency, repair expenses and home
charging infrastructure if purchasing an electric vehicle (EV),
among other aspects," said Chong
Gao, director of product management R&D at Mercury
Insurance. "An EV, for example, might seem appealing for its
expected fuel savings and lower maintenance costs, but insurance
for them is on average 20% higher compared with an ICE vehicle, and
they are typically more expensive to insure versus hybrids as well.
However, as more people adopt EVs and insurance companies gather
more data in the future, their insurance costs will likely even
out."
When deciding between an ICE vehicle, hybrid or EV, here are
some important distinctions to keep in mind:
Fueling/charging costs: Because hybrid vehicles have both
a gas engine and electric motor, they are more fuel efficient than
strictly ICE vehicles, as they can switch between the two motors
while driving. Additionally, hybrids never need to be plugged in
because the battery is recharged via the gas engine, eliminating
the need to install home charging or navigate public chargers.
When it comes to charging EVs, the Department of Energy reports
that about 80% of all charging is done at home, which J.D. Power
notes is the ultimate convenience and most satisfying aspect of EV
ownership. There are two types of EV charging solutions available
for the home, both detailed here. Consumers should be aware that
they will need to consult an electrician to install a Level 2
charger, but some states and localities offer incentives to help
cover the cost. Consumers should also be aware that satisfaction
with public EV charging overall is still poor, according to many
industry reports.
Maintenance: When it comes to maintenance for ICE and
hybrid vehicles, there are several upkeep items that can add to the
cost of ownership over time, such as air filters and oil changes.
Both require similar maintenance schedules and incur comparable
costs. One notable exception is that a hybrid's battery will
eventually need replacement, which can be costly, but United States law requires that all hybrids
come with battery warranties of at least eight years or 100,000
miles, which should offer consumers peace of mind if they plan to
keep the vehicle over the long term.
EVs, on the other hand, do not need many of these routine
services as they lack an internal combustion engine, pistons,
valves and moving parts. This can result in lower routine repair
and maintenance costs compared with ICE and hybrid vehicles, but
J.D. Power reports that EV owners replace tires more frequently
than others. And like hybrids, the EV battery will also need to be
replaced down the road, but all new EVs come with a generous
battery warranty.
Insurance: While EVs may offer a number of advantages in
terms of reduced maintenance and fueling costs, the cost of
insurance might offset these potential savings. "EVs cost more to
insure versus their ICE counterparts because they generally cost
more to buy, and consequently more to repair or replace," said
Stephen Crewdson, senior director of
insurance business intelligence at J.D. Power. "And while today's
EVs have fewer moving parts, it can be costly when they need
replacement. If the battery pack is damaged, for example, the
battery itself is a large expense and certain safety protocols are
often necessary, which leads to a higher repair bill. Plus, there
aren't as many repair shops with technicians trained to work on
EVs, which means these facilities can charge more for the
specialized knowledge they provide."
"The best vehicle type for a particular consumer will ultimately
come down to budget, lifestyle factors and personal preference.
Hybrids serve as a great bridge between ICE and EVs by offering
fuel efficiency and a reduced carbon footprint for consumers who
aren't yet ready to make the leap to an EV," said Gao.
Headquartered in Los Angeles,
Mercury Insurance provides auto, homeowners and business insurance
through nearly 4,100 employees and a network of more than 6,500
independent agents in 11 states.
About Mercury Insurance
Mercury Insurance (NYSE: MCY) is a multiple-line insurance
carrier offering personal auto, homeowners, and renters insurance
directly to consumers and 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 also writes
business owners, business auto, landlord, commercial multi-peril
and mechanical protection insurance in various states.
Since 1962, Mercury has provided customers with tremendous value
for their insurance dollar by pairing ultra-competitive 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.
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SOURCE Mercury Insurance