Rujaai points out that the strong growth of EVs is pushing the insurance business to new challenges: premiums, repairs, and batteries – risks that need to be managed.
Understanding the EV market: As it moves towards widespread adoption, rising repair costs, risks from emerging technologies, and digital-era consumer behavior are challenging traditional warranty models. The article highlights the crucial role of insurance in mitigating uncertainty and building long-term confidence for EV users.
Thailand is rapidly moving towards the electric vehicle (EV) era, amidst pressure from volatile energy prices, global geopolitical situations, and consumer behavior that prioritizes cost-effectiveness in transportation. This has led to EVs becoming an increasingly attractive option. Meanwhile, the insurance industry is facing new challenges from different types of risks compared to traditional internal combustion engine vehicles.
Nicholas Faguet, CEO and founder of Ru Jai Group, stated that the conversation about electric vehicles (EVs) has clearly shifted from the past. Previously, consumers were concerned about driving range, but now they are concerned about energy costs and the uncertainty of future oil prices. Under these circumstances, many consumers are beginning to consider battery electric vehicles (BEVs) as a long-term cost-saving option, reflected in the continuous growth of the Thai EV market.
Furthermore, the government plays a crucial role in accelerating the transition to an EV society through supportive policies in both production and consumption. These include the 30@30 policy, which aims to push electric vehicles (EVs) to account for at least 30% of total vehicle production by 2573, as well as the EV 3.5 measures and low-interest loan programs for EV buyers.
However, even with the rapid growth of the EV ecosystem, the insurance business faces increasing challenges because electric vehicles (EVs) have different risk characteristics compared to internal combustion engine vehicles. One key factor is the different driving behavior, especially for new EV users who need to adapt to regenerative braking and the instant torque from the electric motor. This can lead to a higher likelihood of accidents in the initial stages of use compared to conventional cars, before gradually adjusting to normal levels as drivers become more familiar with the vehicle.
Besides operational risks, repair costs are another crucial issue for insurers. Currently, EV repair costs are almost 40% higher on average than those for internal combustion engine vehicles due to the complexity of battery systems, specialized equipment, and the need for expert technicians. At the same time, the EV repair market in Thailand faces limitations due to the limited number of independent, specialized workshops. As a result, most repairs remain concentrated at manufacturer service centers, a factor driving up repair and insurance claims costs.
Another challenge impacting the insurance business is the increasingly fierce price competition from electric vehicles (EVs). This results in faster changes in vehicle value and depreciation rates than in the past, making damage assessment and premium determination more complex.
Mr. Nicholas stated that while consumers have easier access to electric vehicles due to price competition and government support, this does not mean that the cost of risk for the insurance business has decreased. Insurers still face new factors including technology, maintenance, and changes in asset values.
Furthermore, EV consumers represent a different customer segment from traditional car users. They are largely digitally-savvy consumers who research before making purchases, prioritize technology, and expect a convenient, transparent, and verifiable user experience. Their concerns are not limited to vehicle protection; they also include battery protection, the safety of the charging system, in-car software, and potential responsibilities arising from installing charging equipment in their homes.
“Therefore, electric vehicle insurance can no longer use the same concept as traditional car insurance. Businesses need to develop more accurate risk assessment models, design flexible products, and improve cost management to truly meet the needs of modern consumers.”
Mr. Nicholas stated that as Thailand transitions from the initial stages of EV adoption to widespread use, insurance will play a crucial role as a "safety net," mitigating uncertainty for consumers and transforming unfamiliar risks into manageable costs. He added that the long-term success of this electric vehicle transition will not depend solely on the number of charging stations or the price of the vehicles, but also on the readiness of the surrounding ecosystem, including insurance systems, maintenance, after-sales service, and infrastructure, all of which must be developed to sustainably support the growth of the EV market.
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