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Scratched EV battery? Your insurer may have to junk the whole car

Scratched EV battery? Your insurer may have to junk the whole car

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Scratched EV battery? Your insurer may have to junk the whole car

For many electric vehicles, there is no way to repair or assess even slightly damaged battery packs after accidents, forcing insurance companies to write off cars with few miles – leading to higher premiums and undercutting gains from going electric.

And now those battery packs are piling up in scrapyards in some countries, a previously unreported and expensive gap in what was supposed to be a “circular economy.”

“We’re buying electric cars for sustainability reasons,” said Matthew Avery, research director at automotive risk intelligence company Thatcham Research. “But an EV isn’t very sustainable if you’ve got to throw the battery away after a minor collision.”

Battery packs can cost tens of thousands of dollars and represent up to 50% of an EV’s price tag, often making it uneconomical to replace them.

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While some automakers like Ford Motor Co (F.N) and General Motors Co (GM.N) said they have made battery packs easier to repair, Tesla Inc (TSLA.O) has taken the opposite tack with its Texas-built Model Y, whose new structural battery pack has been described by experts as having “zero repairability.”

Tesla did not respond to a request for comment.

A Reuters search of EV salvage sales in the U.S. and Europe shows a large portion of low-mileage Teslas, but also models from Nissan Motor Co (7201.T), Hyundai Motor Co (005380.KS), Stellantis (STLAM.MI), BMW (BMWG.DE), Renault (RENA.PA) and others.

EVs constitute only a fraction of vehicles on the road, making industry-wide data hard to come by, but the trend of low-mileage zero-emission cars being written off with minor damage is growing. Tesla’s decision to make battery packs “structural” – part of the car’s body – has allowed it to cut production costs but risks pushing those costs back to consumers and insurers.

Tesla has not referred to any problems with insurers writing off its vehicles. But in January CEO Elon Musk said premiums from third-party insurance companies “in some cases were unreasonably high.”

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Unless Tesla and other carmakers produce more easily repairable battery packs and provide third-party access to battery cell data, already-high insurance premiums will keep rising as EV sales grow and more low-mileage cars get scrapped after collisions, insurers and industry experts said.

“The number of cases is going to increase, so the handling of batteries is a crucial point,” said Christoph Lauterwasser, managing director of the Allianz Center for Technology, a research institute owned by Allianz (ALVG.DE).

Lauterwasser noted EV battery production emits far more CO2 than fossil-fuel models, meaning EVs must be driven for thousands of miles before they offset those extra emissions.

“If you throw away the vehicle at an early stage, you’ve lost pretty much all advantage in terms of CO2 emissions,” he said.

Most carmakers said their battery packs are repairable, though few seem willing to share access to battery data. Insurers, leasing companies and car repair shops are already fighting with carmakers in the EU over access to lucrative connected-car data.

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Lauterwasser said access to EV battery data is part of that fight. Allianz has seen scratched battery packs where the cells inside are likely undamaged, but without diagnostic data it has to write off those vehicles.

Ford and GM tout their newer, more repairable packs. But the new, large 4680 cells in the Model Y made at Tesla’s Austin, Texas, plant, are glued into a pack that forms part of the car’s structure and cannot be easily removed or replaced, experts said.

In January, Tesla’s Musk said the carmaker has been making design and software changes to its vehicles to lower repair costs and insurance premiums.

The company also offers its own insurance product in a dozen U.S. states to Tesla owners at lower rates.

Insurers and industry experts also note that EVs, because they are loaded with all the latest safety features, so far have had fewer accidents than traditional cars.

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‘STRAIGHT TO THE GRINDER’
Sandy Munro, head of Michigan-based Munro & Associates, which tears down vehicles and advises automakers on how to improve them, said the Model Y battery pack has “zero repairability.”

“A Tesla structural battery pack is going straight to the grinder,” Munro said.

EV battery problems also expose a hole in the green “circular economy” touted by carmakers.

At Synetiq, the UK’s largest salvage company, head of operations Michael Hill said over the last 12 months the number of EVs in the isolation bay – where they must be checked to avoid fire risk – at the firm’s Doncaster yard has soared, from perhaps a dozen every three days to up to 20 per day.

“We’ve seen a really big shift and it’s across all manufacturers,” Hill said.

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The UK currently has no EV battery recycling facilities, so Synetiq has to remove the batteries from written-off cars and store them in containers. Hill estimated at least 95% of the cells in the hundreds of EV battery packs – and thousands of hybrid battery packs – Synetiq has stored at Doncaster are undamaged and should be reused.

It already costs more to insure most EVs than traditional cars.

According to online brokerage Policygenius, the average U.S. monthly EV insurance payment in 2023 is $206, 27% more than for a combustion-engine model.

According to Bankrate, an online publisher of financial content, U.S. insurers know that “if even a minor accident results in damage to the battery pack … the cost to replace this key component may exceed $15,000.”

A replacement battery for a Tesla Model 3 can cost up to $20,000, for a vehicle that retails at around $43,000 but depreciates quickly over time.

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Andy Keane, UK commercial motor product manager at French insurer AXA (AXAF.PA), said expensive replacement batteries “may sometimes make replacing a battery unfeasible.”

There are a growing number of repair shops specializing in repairing EVs and replacing batteries. In Phoenix, Arizona, Gruber Motor Co has mostly focused on replacing batteries in older Tesla models.

But insurers cannot access Tesla’s battery data, so they have taken a cautious approach, owner Peter Gruber said.

“An insurance company is not going to take that risk because they’re facing a lawsuit later on if something happens with that vehicle and they did not total it,” he said.

‘PAIN POINTS’
The British government is funding research into EV insurance “pain points” led by Thatcham, Synetiq and insurer LV=.

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Recently adopted EU battery regulations do not specifically address battery repairs, but they did ask the European Commission to encourage standards to “facilitate maintenance, repair and repurposing,” a commission source said.

Insurers said they know how to fix the problem – make batteries in smaller sections, or modules, that are simpler to fix, and open diagnostics data to third parties to determine battery cell health.

Individual U.S. insurers declined to comment.

But Tony Cotto, director of auto and underwriting policy at the National Association of Mutual Insurance Companies, said “consumer access to vehicle-generated data will further enhance driver safety and policyholders’ satisfaction … by facilitating the entire repair process.”

Lack of access to critical diagnostic data was raised in mid-March in a class action filed against Tesla in U.S. District Court in California.

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Insurers said failure to act will cost consumers.

EV battery damage makes up just a few percent of Allianz’s motor insurance claims, but 8% of claims costs in Germany, Lauterwasser said. Germany’s insurers pool data on vehicle claims data and adjust premium rates annually.

“If the cost for a certain model gets higher it will raise premium levels because the rating goes up,” Lauterwasser said. 

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ByteDance confirms layoff plan at its Indonesian unit

ByteDance confirms layoff plan at its Indonesian unit

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ByteDance confirms layoff plan at its Indonesian unit

China’s ByteDance will lay off staff at its Indonesian unit following a deal where it bought a local e-commerce firm and combined it with its TikTok operation, a spokesperson said on Friday.

ByteDance, the owner of TikTok, did not say how many employees would be affected. Bloomberg had earlier reported there would be 450 jobs cut.

In January ByteDance completed a deal to buy a majority stake in Tokopedia, an Indonesian e-commerce firm, from the GoTo group.

ByteDance spokesperson Nuraini Razak told Reuters in a statement the company would “make necessary adjustments” as a result of the combination of TikTok and Tokopedia.

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“We identified areas to strengthen our organisation and better align our teams with company goals,” she said, adding the company would “aim to support employees throughout this transition”.

ByteDance had its own e-commerce operation in Indonesia via its TikTok app, but that was banned under an Indonesian rule that social media applications could not operate as an e-commerce platform.

Tokopedia is one of the leading e-commerce platforms in Southeast Asia’s largest economy.

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Indonesia minister threatens to shut down X over adult content

Indonesia minister threatens to shut down X over adult content

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Indonesia minister threatens to shut down X over adult content

Indonesia is prepared to shut down social media platform X if it does not comply with a regulation barring adult content, the country’s communications minister said on Friday. Indonesia, the world’s biggest Muslim-majority country, has strict rules that ban the sharing online of content deemed obscene.

Minister Budi Arie Setiadi told Reuters he had sent a warning letter to X related to this matter.

“We will certainly shut its services down,” he said, pointing to Indonesia’s electronic information and transaction (ITE) law that can carry a six-year jail sentence if someone spreads pornographic content.

His comments in an interview come after the social media platform recently updated its policies to permit consensually produced adult content.

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X, owned by billionaire Elon Musk, has not responded to Indonesia’s warning letter, Budi said, adding the government would send more letters before deciding on a potential closure.

X, formerly known as Twitter, did not immediately respond to a request by Reuters for comment.

Indonesians are big users of social media and X has 24.85 million users in the country, according to data gathering business Statista.

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Japan watchdog recommends action on MUFG units over sharing of client data

Japan watchdog recommends action on MUFG units over sharing of client data

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Japan's securities watchdog recommended on Friday that the banking and securities units of Mitsubishi UFJ Financial Group opens new tab (MUFG) be penalised for what it said was unauthorised sharing of client information. The Securities and Exchange Surveillance Commission (SESC) made the recommendation to the banking regulator, the Financial Services Agency (FSA), which hands out such punishments in Japan. The recommendation, which was widely expected, followed the SESC's investigation into MUFG's banking arm, MUFG Bank, and its two brokerage ventures with Morgan Stanley (MS.N), opens new tab. The investigation found that confidential client information had been shared between MUFG Bank and one of the two securities firms on at least 26 occasions between 2020 and 2023. MUFG Bank also illegally offered preferential lending rates to clients that did business with the group's two securities brokerages, the SESC said. Japan's "firewall" regulations prohibit banks and securities companies in the same group from sharing customer data with one another without the customer's consent. The investigation found no evidence of insider trading, but monitoring and internal controls were lacking, the SESC said. MUFG group companies will make every effort to strengthen control systems in light of the recommendation and will take measures to prevent recurrence, the parent company said in a statement. The two brokerages were established in 2010, two years after MUFG invested in Morgan Stanley at the height of the global financial crisis in 2008. MUFG owned around 23% of Morgan Stanley as of March 2024.

Japan’s securities watchdog recommended on Friday that the banking and securities units of Mitsubishi UFJ Financial Group  opens new tab (MUFG) be penalised for what it said was unauthorised sharing of client information.

The Securities and Exchange Surveillance Commission (SESC) made the recommendation to the banking regulator, the Financial Services Agency (FSA), which hands out such punishments in Japan.

The recommendation, which was widely expected, followed the SESC’s investigation into MUFG’s banking arm, MUFG Bank, and its two brokerage ventures with Morgan Stanley (MS.N), opens new tab.

The investigation found that confidential client information had been shared between MUFG Bank and one of the two securities firms on at least 26 occasions between 2020 and 2023.

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MUFG Bank also illegally offered preferential lending rates to clients that did business with the group’s two securities brokerages, the SESC said.

Japan’s “firewall” regulations prohibit banks and securities companies in the same group from sharing customer data with one another without the customer’s consent.

The investigation found no evidence of insider trading, but monitoring and internal controls were lacking, the SESC said.

MUFG group companies will make every effort to strengthen control systems in light of the recommendation and will take measures to prevent recurrence, the parent company said in a statement.

The two brokerages were established in 2010, two years after MUFG invested in Morgan Stanley at the height of the global financial crisis in 2008. MUFG owned around 23% of Morgan Stanley as of March 2024.

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