A Changing Claims Landscape

Narrowing of severity between BEV and ICE vehicles and growing volumes of customer pay work require different strategies

Recently, Mitchell’s latest Plugged-In EV Collision Insights report revealed that the gap in average claims severity between internal combustion engine and battery electric vehicles had reached its lowest level on record. The report showed that in Canada, the gap has narrowed to just $1234 between ICE and EVs. In the United States it is down to just $729 in the previous quarter of this year. 

One of the reasons why we’ve seen this gap narrow is due to the increasing levels of depreciation we’re seeing with battery electric vehicles, particularly as the EV parc matures and more affordable used electric vehicles become available. It is however, still important to consider that overall EV severity remains higher than 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 we’ve started to see in the U.S. and it will likely be impacting Canada in the months ahead. And, 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 we will see those parts price increases will likely be down to 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 we’ve actually seen prices decline by around 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 more complex, interconnected systems and greater reliance on OEM parts compared with ICE vehicles. This is something to bear in mind, particularly around an environment where tariffs, trade disputes and geopolitical uncertainty continue to influence market and economic conditions. 

Another trend to watch is hybrids. In Canada, claims from mild hybrid vehicles reached 5.52% in Q2 of this year, but what’s interesting is that battery electric claims were almost as high, reaching a record 5.42%. In Canada, mild hybrid and plug-in hybrid claims have seen the biggest year-over-year percentage increases, though EV sales in Canada have rebounded this year-with demand up by 20.8% 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 customer pay work.” 

– Ryan Mandell

Barriers remain

While consumer interest in EVs in Canada has grown recently—JD Power reporting that 34% of new car shoppers surveyed saying they were somewhat or very likely to purchase a BEV as their next vehicle—despite higher fuel prices and more sales incentives in 2026 [which tend to fuel EV demand], there are still significant barriers to adoption, including range anxiety, cold weather performance and limited charging infrastructure. For collision centres, choosing whether to invest in EV tools, equipment and training comes down to knowing your market and what the vehicle parc looks like within in. If significant consumer demand for EVs within that market exists, then it likely makes sense to make these investments, if not it is highly unlikely the ROI will materialize. 

Looking at the state of claims overall, we’re continuing to see a reduction in lower dollar estimates within the claims ecosystem, meaning that more minor damage is showing up as customer pay work. For collision centres, this growth in customer pay opportunities, requires strategic thinking in how teams are trained to sell and perform customer pay work. It is a very different process and conversation when someone is paying for repairs out of pocket versus the cost being handled by an insurer. This is something collision centres need to keep in mind. Orienting to a more value-driven proposition for customer pay work is likely to resonate more with clients, though collision centres must be intentional in how they incorporate this book of business into their processes, how these repairs are managed and ultimately, how they interact with the customer.