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BUSINESS NEWS - South Africa is still playing catch up compared to the rest of the world in the use of electric vehicles which have dramatically increased in many parts of the world over the last few years. Only an estimated 1000 electric cars were sold in South Africa in 2022 and that number hasn’t increased much over the last two years. 

Scepticism over charging and loadshedding has played a big part of the overall sales. 

The biggest factor however is the price of EVs in South Africa. The cheapest electric car available in South Africa comes in just shy of R700 000 with the GWM Ora selling at R686 950, while the majority of EVs sell well above the million Rand mark. The number of charging stations in South Africa is slowly increasing with 350 charging stations situated in major cities all over the country. With charging stations increasing and the number of sales slowly on the up what impact will the rise of electric vehicles have on the car insurance in South Africa?

Here are a few key factors to consider on what impact EVs will play in car insurance.

One of the first factors which will play a role is the overall price of electric cars which is much more when compared to traditional petrol/diesel motors. Factors such as driver behaviour, risk, age and location plays a pivotal part in determining the cost of insurance premiums which insurance companies use to determine premiums using algorithms but the bottom line is the price of the car. The more expensive the car to more expensive the premium will be.

Another factor to consider is the repair of the electric car when the car is involved in an accident. While South Africa’s electric car market is still in its infancy, the network of specialised workshops which are able to repair electric cars is even smaller which means that the time the car takes to get fixed will be longer and more expensive. The parts needed for fixing electric cars are also more expensive which will add to the premium of insuring electric cars.

There are however certain factors that can help in curbing the cost of insuring electric cars. An electric car has much less components and is much less likely to have a break down versus traditional petro/diesel cars. 

Electric cars feature collision avoidance systems which can help in reducing the number of accidents which may positively impact on the insurance premium. The reduction of carbon emissions that EVs have on the environment can also be looked at if government starts playing a role. This can be done through subsidies or other initiatives to increase the sales of electric cars in South Africa and thus reducing the overall price of both EVs and repair costs which will lead to lowering of premiums. Electric cars also gives insurance companies a much bigger picture of the behaviour of the driver through telematics which sends data to and from the car which is used to assess risk.

South Africa’s electric car market will undoubtedly grow through the coming years as more drivers are looking for ways to lessen their impact on the environment and as the cost of fuel continue to rise. Insurance companies will need to navigate the waters of the incoming electric car tide.

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