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Spike in EV Collision Claims: What It Means for Car Dealerships

Update Understanding the Rising Costs of EV Collision ClaimsAs electric vehicles (EVs) become increasingly prevalent on American roads, their owners find themselves navigating the complexities of higher costs associated with repairs and insurance. According to a recent report by Insurify, battery-electric vehicle (BEV) collision claims rose by 4% year-over-year during the third quarter of 2025, largely due to the high costs of specialized repairs and the limited availability of aftermarket parts. With over 3% of all U.S. collision claims involving repairable BEV damage, this trend raises significant questions about the future viability of EV sales.Why Repair Costs Are SoaringOne significant driver behind the spike in collision claims for EVs is their unique technological makeup. Research indicates that original equipment manufacturer (OEM) parts accounted for about 85% of the costs associated with these repairs. When an electric vehicle sustains damage, the complexity of its systems, including advanced safety features and high-voltage components, necessitates specialized repairs that are often more expensive than conventional vehicles. Insurify data highlights that EVs now cost an astounding 49% more to insure compared to gas-powered vehicles, which affects consumer decisions as they evaluate the total cost of ownership for their vehicles.The Impact of Government IncentivesInterestingly, consumer sentiment plays a crucial role in the landscape of EV ownership. Prior to the expiration of various federal tax credits, 45% of EV owners indicated that they might not have purchased their vehicles without these incentives. As these incentives fade, the current figures indicate a potential downturn in EV purchases, with almost 30% of buyers stating they would no longer be able to afford an EV at full price. Such market dynamics could signify a troubling trend for manufacturers and sellers alike if consumers back away from purchases due to financial concerns.Debunking Myths Around EV Total Loss FrequenciesWhile many hold misconceptions regarding the total loss frequency of EVs compared to internal combustion engine (ICE) vehicles, current data reveals they are quite comparable. The total loss rate for EVs stands at 7.35%, while ICE vehicles are slightly higher at 7.47%, debunking the myth that EVs are more frequently totaled. This information reflects a critical understanding for car dealers and management in promoting EV sales without the misinformation that could hinder customer confidence.Future Insights: Shifting Repair Demand & Supply ConcernsAs the automotive industry's market evolves, the rise in repairable EV collision claims highlights a changing landscape driven by consumer behavior and technological complexity. With fewer repair claims, but with rising repair costs, shops are adapting to the specific needs of EVs, which include necessary training for technicians to properly handle advanced systems. Moreover, supply chain challenges related to the availability of parts and rising material costs complicate matters further, making it crucial for dealership management to stay abreast of industry shifts.Next Steps for Auto Finance ProfessionalsFor car dealer principals and finance managers, understanding these trends will be vital in shaping the financing options they present to customers. As car buyers weigh their choices amid these rising costs, dealers should guide them on financing strategies that might offset the high initial costs of EVs, such as offering integrated financing for repairs and insurance. Highlighting these options will become essential as the industry navigates this complex and evolving market.