Electric Cars cost $400 more to be Insured on Average compared to a Gasoline Variant
Electric Vehicles, in spite of having higher safety features, cost almost $400 more on car insurance than their gasoline variant. With companies like Ford, known for their petrol-fueled muscle cars, now diverging into the electric car market, it is clear that companies see electric vehicles as the way of the future. However, high insurance costs could be a factor in slowing their growth rates in the market.
Ford recently introduced its first mass-market all-electric vehicle, the Ford Mustang Mach-E electric vehicle. Though the vehicle was initially supposed to be Mustang-inspired, the company decided to name it as a Mustang to the surprise of many.
A pretty radical move for the company, given that this is only the second mustang ever. Ford announced 5 different versions of the Mustang Mach-5 across varying price ranges. Starting with the Select Mustang Mach-E, which starts at $43,895 with a range of 250 miles, the highest variant is the MACH-E GT, priced at $60,000, with a range of 300 miles. The base model of the Tesla Model Y, on the other hand, costs around $39,000.
It is becoming more apparent that cars are becoming much smarter and safer today. Theoretically, this should mean lower car insurance rates. However, insurance companies have shied away from lowering insurance rates for electric cars, presumably due to the high cost of replacing their parts.
This was one of the scenarios that lead to Tesla and Porsche providing inhouse insurance plans to their customers at a much lower rate than that provided by private insurance firms. Although, Ford, as of now, has not announced any such plans. A standard Mustang costs around $1,992 to insurance in the U.S., which is much higher than an average car. The possibilities are that most likely, the Mach-E will be more expensive to insure.
Ford is teaming up with Electrify America, the charging network owned and managed by Volkswagen, in order to provide access to a large infrastructure of charging networks that the car will be able to use. The car will be able to charge up to 150 kilowatts. The Tesla Model Y, on the other hand, has a charging capacity of 75 kilowatts and a range of about 250 miles. Although both the cars come with semi-autonomous driver systems, the Model Y has optional features like the automatic lane changing, which the “Mustang” does not have.
On comparing the electric cars with their gasoline counterparts, it becomes evident that there is a price gap in the car insurance rates, as observed from the table below.
On comparing the car insurance rates of the top-selling electric cars, it is clear that they cost twice as much as the national average of car insurance.
If the future of the car industry has to be electric, then the manufacturer has to find a way to lower costs and ensure its availability. Currently, electric vehicles occupy only 2%-3% of the market share. Maybe in the future, when the EVs occupy a market share of 30%, we can expect lower insurance rates.