Expensive premiums, a non-competitive market, expensive parts, high claim frequencies all contribute to making Tesla a difficult car to insure.
Expensive premiums
The premiums are also set at a high price. People can end up paying 50% more to insure their Tesla, compared to other cars in the market. For comprehensive car insurance, the price for electric vehicles ranges between HK$40,000 and HK$50,000 per year, compared with about HK$10,000 for gasoline-powered cars. For example, just last year, AXA has tripled its insurance premiums for electric cars and even the raised the excess to as high as HK$130,000.
Non-competitive market
On top of that, Tesla repair shops are in a non-competitive market. Competition drives down the price, but when the market has less competition, businesses can set high prices on goods without the pressure of being brought down. The solution to this would be to open more Tesla repair shops, but no businessman would want to do that in the market today, judging by the prices to purchase Tesla’s spare parts.
Expensive parts
According to the prices we found in the market, just replacing the windscreen on a Tesla can cost up to 20,000 HKD, while the windscreen on other cars can be replaced for a few thousand dollars. The reason behind the high price is that, Tesla does not fix the car but replaces all the damaged parts, with the components having to be imported from the US.
Difficulties in pricing products
Additionally, insurance companies are having hard time pricing policies for a Tesla. For example, the Tesla S vehicle comes in different variations, one giving it sedan type of feel while the other giving it sportscar feel. Insurance companies have got their policies priced the same, even though the two models are very different.
High claim frequencies
High claim frequencies are another reason Tesla cars are harder to insure. High claim frequencies don’t necessarily mean that Tesla cars get in more accidents than other cars in the market, but rather that Tesla owners always want their cars in the best condition. This makes sense as people would want their luxurious and expensive items looking at their best. Therefore, any little scratch is already reason to take the Tesla to the body shop.
And because Tesla cars are so hard to insure, even though the Hong Kong government has launched the “One for One Replacement” scheme to promote the use of electric cars, there has only been very limited growth in the number of private EVs.
