Servicing and repairing electric vehicles (EVs) requires new skills and many workshops will be out of job some time in the future. What will this mean for insurer supply chain managers, auto OEMs and digital claims platform vendors?

The rising prices of petrol and diesel for internal combustion engine (ICE) autos has reportedly increased the demand for electric vehicles.Repairing these is a different matter than for ICE vehicles. The Battery represents 30% of the value of the vehicle and requires specialist equipment and training to repair. The ICE vehicle power train comprises around 2,000 components rather than the 20 or so of an EV. Many repairs and upgrades of EVs can be delivered over IP with software updates. 

Fewer moving parts mean less wear and tear, there will be no oil or spark plug changes and servicing revenues will fall by around 40% according to McKinsey. At the same time GM has reportedly told its dealerships they will have to invest circa $200k in new equipment and training at the same time as revenues and dealership visits drop. As vehicle technology advances beyond ADAS level two the connected vehicle, telematics data from the EV technology stack will fuel predictive maintenance analytics and even automatic booking of vehicles into workshops when necessary.

Technological disruption like this does, though, provide an opportunity for new entrants. Elon Musk, after all, was an industry outsider when he set up Tesla, his (for now) Californian carmaker, which launched its first EV, the Roadster, in 2008. Already there are signs that companies from other areas are looking to enter the EV-servicing business. 

"After buying a Roadster, Pete Gruber started repairing them in 2013. His company, Gruber Motor, based in Phoenix, Arizona, has grown into an independent Tesla service centre. The firm has developed its own tools and test equipment to repair the individual components in the electronics and batteries of Tesla cars. This is possible, says Mr Gruber, because he has also had more than 30 years experience running a company that repairs high-voltage power systems in data centres, meaning the technology was familiar."

The Economist 23rd October 2021

Auto OEMs moving into insurance, new entrants into the EV repair business and the slow but steady move to autonomous vehicles with even more software innovation. Combine this with the evolution of digital auto claims  platforms and "touchless claims" by the likes of Verisk, LexisNexis, CCC, Mitchell, Audatex, Tractable and combinations of these with insurtechs and the traditional ICE repairer will become a specialist serving s reducing parc of ICE vehicles particularly after 2030.

Motor insurers need to factor this into strategy and planning whether it be embedded insurance at point of sales and lease, the validation, triage and estimating of damage, total loss or repair, and supply chain management and the upskilling and technology support of claims adjusters before the exodus of retiring adjusters makes this a critical issue and the repair network and auto OEM call the shots.