Electric vehicles — worth it?

Published: Friday, May 24, 2024

Consumer AffairsEconomyInsurance Security AutomotiveGeneral LifestyleTransport

Want to switch to an EV? Make sure you understand the insurance implications first.

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Despite South Africa's long-standing energy issues and them being considerably more expensive than their fossil fuel equivalents, interest in electric vehicles (EVs) is growing in South Africa. While sales of hybrids and EVs still account for less than 1.5% of all new cars, they did jump 65% between 2022 and 2023. 

Those numbers will keep growing, especially as such vehicles become more affordable and charging infrastructure becomes more widely available. While the former will depend heavily on local manufacturing plants switching to EV manufacturing, the embrace of solar photovoltaic PV by residential and business users will go a long way to accelerating the latter.

In fact, a startup recently announced plans to build 120 off-grid charging stations in South Africa. With numerous fuel stations, malls and commercial parking centres in some of South Africa’s biggest cities already hosting EV charging stations, it’s only a matter of time before they are fully mainstreamed. 

With that in mind, if you're one of the people looking to ditch fossil fuels because of their cost or environmental impact, there are insurance implications that you must consider. As MiWay Blink head Keletso Mpisane points out, while many of the insurance fundamentals are the same, there are a few differences that drivers must bear in mind. 

"From a liability perspective, there's very little difference between the two classes of vehicle,"  Mpisane says. "Whether you're in an accident while driving an EV or internal combustion vehicle, the same procedures apply: If possible, get the other driver's details, take photos and report to the nearest police station so that you can get a case number."   

The biggest difference, Mpisane says, comes in cost. 

"In addition to a lack of local manufacturing capacity, EVs are more expensive in South Africa thanks to high import tariffs," she says. "That means that, as things stand, any EV will be more expensive to insure than its internal combustion equivalent." 

"It's also worth remembering that, while EVs contain fewer components than their traditional, internal combustion vehicles, those components are more specialised and more expensive," Mpisane adds. "That can further drive up the cost of insurance, as can the relative scarcity of EV mechanics and repair shops in South Africa."

Mpisane does, however, note that the local insurance industry is looking at whether EV-specific components such as batteries need to be backed into insurance policies going forward. She adds that, unlike an internal combustion vehicle, investing in an EV may also impact your home insurance. 

"If you've had any charging infrastructure installed at home, you should notify your home insurance provider," she says. "It's a fairly major piece of electrical infrastructure and will impact the value and risk to your home in much the same way as solar panels and batteries would."

Finally, while some have speculated that EVs will be cheaper to insure because they are less likely to catch fire and range anxiety will push drivers to drive more carefully, Mpisane cautions against taking anything for granted. 

"As with an internal combustion vehicle, the best way to save on insurance from month to month is to use an insurance app that monitors your driving habits and adjust them accordingly," Mpisane concludes. "Regardless of what vehicle you drive, you are much less likely to have an accident if you drive outside of peak hours, do not exceed the speed limit and stay off your phone. At MiWay Blink, we're committed to rewarding those safe driving habits in our customers, regardless of whether they drive an EV or internal combustion vehicle."

For more information, visit www.insureblink.co.za

*Image courtesy of MiWay Blink

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