Insurance Companies Are More Willing To Pay Out For New Tesla Than For Repairs

Insurance Companies Are More Willing To Pay Out For New Teslas Than For Repairs

Tesla's focus on design and performance has made it difficult for owners to repair their vehicles; that EV maker has been criticized for being difficult to repair. In an effort to maximize the amount of time customers spend in the Service Center, Tesla often charges a fortune to replace complete modules when swapping a single part would do the trick. Reuters verified that this has a negative effect beyond these fixes: it makes insurance companies more willing to pay out for new EVs because they are too expensive to repair.

Reuters found that more than 120 Model Y vehicles totaled after crashes were listed on auction sites such as Copart and IAA in December and January. Most of them had fewer than 10,000 miles on their odometers, which shows how expensive it is to fix these vehicles and put them back to work.

The analysis did not reveal how extensive the damages were or if they affected the battery pack, which can cost more than $20,000 by itself. Despite that, Reuters gave some examples of repair costs that show just how serious the issue is. For example, one Austin-built 2022 Model Y Long Range had a retail price of $61,388, and fixing its front collision damages would cost $50,388. Another Texan Model Y suffered a side crash but had a retail price of $72,667; repairing its EV would demand $43,814.

The media outlet tried to get comments from Tesla, insurance companies, Copart, and Insurance Auto Auctions (IAAI). But all of them followed the electric-car maker's lead and declined to answer questions. Despite that, in his typical fashion, Elon Musk touched on the subject at Tesla's Q4 2022 earnings call.

Insurance Companies Are More Willing To Pay Out For New Teslas Than For Repairs

In an interview with Bloomberg, Tesla CEO Elon Musk said that premiums from insurance companies were "unreasonably high," which explained the company's success with its insurance branch. However, he didn't mention - and nobody asked - if it was not the other way around: what if Tesla was forced to create its own insurance policies to cope with the high prices of fixing its own cars?

Musk also shared something that seemed like a late realization: "It's remarkable how small changes in the design of the bumper and providing spare parts needed for collision repair have an enormous effect on the repair cost." Of course, car manufacturers have known this for ages. Even insurance company organizations suggest these changes to lower repair costs. The Tesla CEO also said that the company wants "to minimize the cost of repairing a Tesla if it's in a collision."

In 2012, Tesla Motors delivered the first mass-production Model S. The company's most recent new passenger vehicle is the Model Y, which was introduced in 2019. However, this must be the first time that Tesla Motors has disclosed any concern with repair costs or providing the necessary components for them. In fact, the electric-vehicle maker is famous for fighting against Right to Repair regulations.