The impact of automotive electrification on the North American collision repair industry
A recent McKinsey & Company study1 found that 56% of North American respondents are more interested in the purchase of a hybrid or electric vehicle (EV) because of the pandemic, with half of those individuals indicating that they were “significantly more” interested.
At first glance, those results may seem odd since there is not an obvious relationship between electrified powertrains and global pandemics.
Further analysis, however, found that an increased environmental focus was the reason behind a large number of the responses.
Twenty percent of those surveyed stated that sustainability concerns were one of the top three reasons for their interest in hybrids and EVs and 19% cited recent air quality improvements (as a result of fewer vehicles on the road).
This data—coupled with available government stimulus funds and incentive programs—suggests we may experience a more rapid uptake of alternative energy automobiles than previously anticipated.
Greater emphasis
Some manufacturers such as General Motors are placing so much emphasis on electric vehicles as the core of their forward-looking strategy that they’ve even re-branded their classic logo to showcase their commitment to electric vehicle production and adoption.
GM’s Chief Marketing Officer, Deborah Wahl stated “we’re creating a call to action and we’re showing how we plan to lead the future by inviting ‘everybody in.’ … we want to spark the mass EV adoption movement.”2
According to Morgan Stanley analyst Adam Jonas, GM currently has about $27 billion invested globally in the development of 30 new Electric Vehicle models through the year 2025.3
The growth of this segment presents specific challenges for the collision repair and insurance industries as EVs require additional labour for the management of the high voltage battery system and also are typically constructed using a higher percentage of lightweight materials which makes repair of major components more difficult.
With new vehicle models constantly becoming more complex, EV’s are often considered to be among the most complex in the collision repair industry.
More fault codes
Based on data produced by scans completed using the Mitchell Diagnostics tool, we can see that, when scanned, EVs produce 50% more fault codes than ICE’s, even when we focus on only 2015 and newer model years.
The dependence on digital infrastructure for an electric vehicle far surpasses that of a vehicle with a traditional internal combustion engine. An EV uses computers and processors instead of fuel and ignition to produce propulsion.
Therefore, it is simply more likely that one of these electrical system components will be disrupted during the course of a collision or the subsequent repairs.
The entire automotive industry has been moving in this direction for some time now with OEM’s looking to meet ever more rigorous fuel economy standards.
Reducing the overall weight of a vehicle in addition to maximizing powertrain efficiency, is the top strategy manufacturers are taking to accomplish this task.
EV’s, again, represent the leading edge of this trend. With an extremely heavy high voltage battery system to offset, automakers must turn to a higher percentage of lightweight materials in the construction of these vehicles.
This has proven to be an extremely effective strategy across the industry but it means a dramatic shift in the way vehicles are constructed; how these materials behave in an accident and how their components are treated during the course of a collision repair.
Less repairable, higher cost
All of the materials being leveraged by OEM’s today as alternatives to mild steel are less repairable than steel, and in many cases as with Ultra High Strength Steel, are not repairable at all!
This is not simply a decision made by automakers but rather a byproduct of the nature of the materials themselves.
The difference in the repair properties of these modern substrates means repair facilities simply do not have the same opportunity to repair parts as they once had.
Electric Vehicles truly are a different breed that comes with their own specific set of requirements and exemplify the changes in complexity seen in the automotive industry over the past decade.
The intricacy of the electrical systems, methods of construction, and processes surrounding the high voltage batteries mean that a repair on an EV is not only more involved and more costly, but it also takes significantly greater time to complete.
As such, it is imperative to appreciate such differences to prepare the most accurate repair plan, set appropriate expectations for vehicle owners, and fully comprehend the growing size of the EV car parc will have on an insurer’s financial future.
1 McKinsey & Company, Mobility investments in the next normal (2021).
2 Michael Wayland, General Motors redesigns corporate logo as it focuses on electric vehicles (CNBC, 2021).
3 Tim Mullaney, Wall Street wrestles with how to value 100-year-old GM, Ford as automaking goes all-in on EVs (CNBC, 2021).
Ryan Mandell is Director, Performance Consulting at Mitchell International. You can reach him at [email protected]
