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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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Huawei says Chery’s Luxeed S7 delays will be resolved in April

Huawei says Chery’s Luxeed S7 delays will be resolved in April

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Huawei says Chery's Luxeed S7 delays will be resolved in April

 Huawei said that a shortage of semiconductors and factory relocation issues that had delayed production and deliveries of its Luxeed S7 sedan should be resolved from next month, local media outlet Cailianshe reported on Saturday.

It quoted Huawei managing director and chairman of its smart car solutions, Richard Yu, who was speaking about the issues surrounding Chery’s (CHERY.UL) Luxeed S7 sedan at an annual forum organised by the EV100 think tank.

Reuters reported in January that Chinese automaker Chery and another Huawei partner, Changan Auto (000625.SZ) had lodged complaints with Huawei over how production issues with a computing unit the tech giant manufactured had caused delays to deliveries of their flagship model.

The Luxeed S7 sedan – the first model for Chery’s Luxeed EV brand – had orders of about 20,000 as of Nov. 28. Luxeed said in January that buyers could be reimbursed by up to 10,000 yuan if they were unable to pick up the car as promised. The S7 is priced from 249,800 yuan ($34,716.62).

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The brand was only launched in November and had been much hyped by Huawei with Yu previously claiming the S7 would beat Tesla’s luxury Model S in performance and at a price lower than the Model 3.

Yu also told the EV100 forum that its autos business unit would likely turn a profit from April after losing billions of yuan in the past year, due to strong sales of mid to high-end models built by its partners.

Huawei launched its smart car unit in 2019 with the aim that it could become the equivalent of German automotive supplier Bosch of the intelligent electric vehicle (EV) era and supply software and components to partners.

But it is the only money-losing unit among Huawei’s main six and brought in only one billion yuan revenue in the first half of 2023, a fraction of the company’s 310.9 billion yuan total.

Last year, Huawei announced that it would spin the unit off into a new company which will receive the unit’s core technologies and resources and take investment from partners such as automaker Changan. 

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US investigating Meta for role in illicit drug sales

US investigating Meta for role in illicit drug sales

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US investigating Meta for role in illicit drug sales

US prosecutors in Virginia are probing whether Facebook-parent Meta’s (META.O) social media platforms facilitated and profited from the illegal sale of drugs, the Wall Street Journal reported on Saturday, citing documents and people familiar with the matter.

The prosecutors sent subpoenas last year and have been asking questions as part of a criminal grand jury probe, the report said, adding that they have also been requesting records related to drug content or illicit sale of drugs via Meta’s platforms.

The Food and Drug Administration has also been helping with the investigation, the newspaper added. It noted that investigations do not always lead to charges of wrongdoing.

The paper quoted a spokesman for Meta as saying in a statement: “The sale of illicit drugs is against our policies and we work to find and remove this content from our services”.

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“Meta proactively cooperates with law enforcement authorities to help combat the sale and distribution of illicit drugs,” he added.

The prosecutors’ office and a spokeswoman for the FDA declined to comment to WSJ.

Meta, the FDA and the Virginia Attorney General’s office did not immediately respond to a Reuters’ request for comment.

Meta’s president of global affairs, Nick Clegg, said on social media platform X on Friday that Meta had joined up with the US State Department, the United Nations Office on Drugs and Crime and Snapchat to help disrupt the sale of synthetic drugs online and educate users about the associated risks.

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Malaysia central bank says Google misquoted exchange rate a second time

Malaysia central bank says Google misquoted exchange rate a second time

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Malaysia central bank says Google misquoted exchange rate a second time

Malaysia’s central bank said on Saturday that Google had misquoted the ringgit’s exchange rate, undervaluing the currency against the dollar, and that it would seek an explanation from the tech giant.

The ringgit, which declined to a 26-year low last month, has weakened about 2.44% this year. Bank Negara Malaysia (BNM) has said the currency is undervalued and does not reflect Malaysia’s positive economic fundamentals.

The bank said in a statement that Alphabet Inc’s Google (GOOGL.O) published “inaccurate” information on Friday and had also done so on Feb. 6.

“As this is the second instance of misreporting, BNM will be engaging Google for an explanation of how the inaccurate reporting occurred and the corrective measures taken given that this is a recurring issue that has afflicted Malaysia and other countries in the past few months,” BNM said in a statement.

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It did not elaborate. Google was not immediately available for comment outside of U.S. business hours.

The search giant does not verify data provided by financial exchanges and other content providers, and disclaims any obligation to do so, according to disclaimers on its website.

Google quoted the ringgit at 4.98 to the dollar on Friday, BNM said, while the Malaysian currency’s weakest level on official data was 4.7075.

BNM quoted the ringgit at 4.7015 at 9 a.m. and 4.7045 at 5 p.m. on the onshore interbank market. For comparison, LSEG data used by many international market participants quotes a Friday close of 4.7020.

BNM Governor Abdul Rasheed Ghaffour said last week Malaysia’s government and central bank were taking coordinated action to further increase flows into the foreign exchange market to ensure the ringgit remains stable.

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