As new vehicles hit a sales record last year, consumers have been smashed by massive increases in insurance costs, with 36.5 per cent rise in policy costs between the first quarter of 2022 to the third quarter of last year.
Customers are experiencing significant bill shock as their premiums fall due, punished by what the insurance industry described as "supply chain issues" and "rising repair labour costs".
The Insurance Council of Australia, which lobbies for the insurance industry, said claim costs had risen 43 per cent between 2017 and 2023 but others which regularly track transport data, such as the Australian Automobile Association, put the figure much higher.
EV insurance costs in Australia are far more opaque than those of internal combustion cars although online forums offer a strong guide of how hard owners are getting slugged, one reporting in December his Tesla insurance renewal from Allianz went up 70 per cent and another reporting the comprehensive policy on his Model Y jumped from $1600 to $2600.
Local repairers, who did not want to be identified for fear of retribution from insurance companies which provide them with regular business, said ACT buyers, in particular, had fallen into a "repair cost trap" through the territory's love affair with Tesla electric vehicles.
Canberra has the highest proportion of EV sales per capita - around one in five new vehicles sold is an EV - in Australia. The Tesla Model Y and Model 3 were among the top three best-selling vehicles in the ACT last year.
The EV company operates a closed-loop system of parts supply, pricing and repair certification where there's little or no competitive pressure.
While Australia's EV market is in its infancy, the historical industry data which underpins crash repair costs is not fully established.
However the overseas experience, both in the UK and US, is most disconcerting.
Respected UK automotive risk analysts Thatcham Research recently published a damning report - backed by hard data - which supports the concerns expressed about EVs within Australia's car repair industry.
In its 2023 report "Impact of BEV [Battery Electric Vehicle] Adoption on the Repair and Insurance Sectors", Thatcham's research found that "BEV claims are already around 25.5 per cent more expensive than their ICE [internal combustion engine] equivalents and are taking around 14 per cent longer to repair".
"EV batteries are a significant percentage of the original vehicle value, rapidly presenting significant negative impact to the economic model of vehicle repair," the report said.
"Despite the relatively small number of EVs in the market there is already a lack of affordable or available repair solutions, inadequate post-accident diagnostics, and limited availability of recycling and reusability options.
"Without meaningful change, there is a strong likelihood that claims costs will continue to rise disproportionally."
In its third quarter 2023 report, giant US repairer Mitchell found Tesla cars required an average of six hours more labour to repair and "overall, Q3 repair costs for all EVs continued to trend higher than those for ICE automobiles".
But even among conventional internal combustion vehicles, insurance is becoming prohibitively expensive.
An analysis conducted by compare-the-market company Mozo last year found that in 2023, car insurance generally rose 13 per cent over 2022, with the average cost of a comprehensive policy at $1472 annually.
Roy Morgan data from research released late last year revealed there were 2 million more vehicle insurance policies written in 2023 than in the previous COVID-affected year, and yet overwhelmingly, over 60 per cent of customers did not shop around, while 26 per cent did so and found another insurer.
The Australian Automobile Association's quarterly transport affordability index found that Canberra's total transport costs per household have increased by $794 from 12 months to the end of September 2022.
However, because of high average incomes across the ACT - the national capital has the second-highest average weekly earnings in the country according to the Australian Bureau of Statistics - transport costs as a proportion of income are lower in Canberra than another other capital city.
Nonetheless, 14.7 per cent of Canberrans' weekly income was spent on transport costs in the September quarter of last year, or around $447 per week.
