Recent years have seen an increase in popularity of battery-operated vehicles, which are commonly known as electric vehicles, or EVs. They are an environment-friendly commute since they do not rely on petrol or diesel. Instead, it uses battery power that usually accounts for more than half of the cost of the vehicle.
But, if you are wondering whether the depreciation cost of an EV will be similar to fuel vehicles, the simple answer is no. It is because EVs have batteries that make up for more than half of the cost of the vehicle.
On average, the lifespan of an internal combustion engine (ICE) is 10-15 years, whereas a battery, generally, lasts for 5 years at the most. Given the relatively shorter lifespan of an EV battery, an EV should depreciate much faster than a fuel-operated vehicle. However, the neutralising factor is the rise in the global demand for electric vehicles. Several countries around the world have imposed a ban on the sale of vehicles that operate on combustion engines by 2035, given their contribution to environmental problems across the world. Hence, it is quite difficult to determine the exact depreciation value of an EV that is being driven on Indian roads.
As of now, in India, electrical vehicles are being depreciated at the same rate as conventional motor vehicles. The same is courtesy of the laid-out schedule for the same by the Insurance Regulatory and Development Authority of India (IRDAI). But several noted figures in the Indian Insurance industry argue that it should not be the case, given the battery's share in the overall cost of the EV and its relatively shorter lifespan. You can visit the official website of IRDAI for further details
But, insurers are finding it hard to determine the correct depreciation date for battery-operated vehicles. It is due to the fact that the purchase of EVs is a trend that picked up steam only recently in India, and as of now, less than 2% of the vehicles that are being driven on Indian streets are EVs. Hence, it is believed that the car insurance
companies, as well as the IRDAI, will be able to determine the depreciation rate for an EV after there are enough EVs on the roads of India to warrant an actuarial evaluation by its insurers.
But, on the flip side, the stalwarts of the insurance industry believe that a particular aspect of the EVs could offset the loss of value due to the short lifespan of an EV battery to an extent. Since an EV has relatively few mechanical parts, the rate of wear and tear is slower as compared to that of a traditional motor vehicle. But, for now, it is too early to tell, given that the EV industry is currently at a nascent stage. In addition, insurers cannot deviate from the depreciation schedule which has been laid out by the regulator, the IRDAI, for traditional motor vehicles. You can visit the official website of IRDAI for further details
However, experts believe that the EV industry will grow at a cumulative rate of 90% year on year and by the year 2030, the Indian EV market will grow into a $150 billion industry, as per an article on Business Today.
EVs are being depreciated like traditional motor vehicles in India right now, however, things may change after a few years. Given the structural differences in how both types of vehicles work, insurance companies are providing electrical vehicle insurance covers for relatively cost-effective premium amounts. Such policies cover damages to the battery and other parts of the EV as a result of manmade events or natural calamities. Hence, if you are making a conversion to electric car
and getting an electric car insurance
policy, this is something you should keep in mind.
If you are someone who is looking for insurance cover for your electrical vehicle, why not take a look at the electrical vehicle insurance
policy options that Bajaj Allianz has on offer. You can compare the various insurance cover options with the help of our premium calculator before, during or after you have made the conversion to the electric car of your choice. Take a look at them right away!
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
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