A Changing Claims Landscape

Narrowing of severity between BEV and ICE vehicles and the growth of customer-pay work require different strategies.

Recently, Mitchell’s latest Plugged-In EV Collision Insights report reveals that the gap in average claims severity between battery electric vehicles (BEVs) and automobiles with an internal combustion engine (ICE) has reached its lowest level on record. In Canada, the gap has narrowed to just $1,234 and in the United States, it is down to $729 based on claims data from the second quarter of this year.

One reason why the gap has narrowed is the increasing levels of depreciation with BEVs, particularly as the electric vehicle parc matures and more affordable used options become available. It is, however, still important to consider that overall, BEV severity remains higher compared with conventional vehicles, and ongoing geopolitical and trade-related issues are likely to impact replacement parts availability and cost going forward.

Parts inflation expected

Parts inflation is something that the U.S. is experiencing and it will likely impact Canada in the months ahead. It is expected we will start seeing pricing headwinds across the board for all manufacturers whether they offer battery electric, hybrid, or ICE-powered vehicles.

To what extent those parts prices increase will depend on individual OEMs and their supply chains. There are some manufacturers, notably Tesla, that to date have not seen any parts inflation at all. In the U.S., parts inflation has remained flat for Tesla vehicles, while in Canada prices have declined by approximately 3%.

Going forward, however, things could change significantly, and parts inflation is something collision repairers and the industry need to consider. Furthermore, historically, battery electric vehicles still tend to cost more to fix due to their complex, interconnected systems and greater reliance on OEM parts compared with ICE vehicles. This is something to bear in mind, particularly in an environment where tariffs, trade disputes and geopolitical uncertainty continue to influence market and economic conditions.

Another trend to watch is hybrids. In Canada, the share of repairable claims for mild hybrid vehicles reached 5.52% in Q2 of this year and BEV claims were almost as high, reaching a record 5.42%. In Canada, mild hybrid and plug-in hybrid repairable claims have seen the biggest year-over-year percentage increases, though EV sales in Canada have rebounded this year—with demand up nearly 21% during the first four months of 2026 compared with the same period in 2025.

“For collision centres, this growth in customer pay opportunities, requires strategic thinking in how teams are trained to sell and perform repairs.”

– Ryan Mandell

Barriers remain

While Canadian consumer interest in BEVs has recently grown, JD Power reported that 34% of new car shoppers surveyed were somewhat or very likely to purchase a BEV as their next vehicle. Despite higher fuel prices and an increase in sales incentives in 2026 [which tend to boost BEV demand], there are still significant barriers to adoption. They include range anxiety, cold weather performance and limited charging infrastructure. For collision centres, choosing whether to invest in new tools, equipment and training to properly and safely repair BEVs comes down to knowing their market and its vehicle mix. If significant consumer demand for BEVs exists in that market, the additional investment is warranted. If not, it is highly unlikely that the ROI will materialize.

Looking at the state of claims overall, there continues to be a reduction in lower dollar estimates, meaning that more minor damage is showing up as customer-pay work. This growth in customer-pay opportunities requires strategic thinking in how collision centre teams are trained to sell and perform repairs. It is a very different process and conversation when consumers pay for repairs out of pocket versus letting their insurance carriers manage the expenses. Orienting to a more value-driven proposition for customer-pay work is likely to resonate more with policyholders, though collision centres must be intentional in how they incorporate this book of business into their processes, manage the repairs and, ultimately, interact with vehicle owners.