Author: Feng Jingang
At the recently held Global New Energy Vehicle Conference, Zeng Yuqun, chairman of CATL, proposed that “CATL’s battery swapping technology could potentially enable users to only purchase car bodies, and save a lot of costs through shared battery swapping and battery leasing.”
Zeng’s remarks have sparked a lot of discussions among netizens. For example, some netizens questioned the practicality of battery swapping and the potential disputes that could arise in case of accidents, including the cost of battery swapping insurance, which would make it impossible to save money.
In fact, with the invention of electric vehicles over one hundred years ago, battery swapping technology has also emerged and it can be said that battery swapping is strongly linked to electric vehicles. In recent years, as a result of leading battery swapping companies such as NIO and CATL, battery swapping for electric vehicles has also made significant progress in China.
In fact, the adoption of the battery-electric separation battery-swapping model not only reduces the cost of purchasing a car, but also improves safety (batteries can be easily replaced in case of problems). In case of accidents, users can directly contact the insurance company for compensation.
Recently, reporters from “The Electric Power” and Jiang Qianyou, director of the China People’s Property Insurance Company, discussed topics related to new energy vehicle fires and insurance. Jiang not only discussed responsibilities and rights of various parties in case of new energy vehicle fires, but also highlighted the importance of insurance in new energy vehicle accidents.
New Energy Vehicle Insurance Rules Released, Consumers Finally Have Clear Protection
In recent years, China’s new energy vehicle industry and market have experienced explosive growth, but related services, such as insurance, are still being gradually promoted and improved.
Many people may not be aware that before the new energy vehicle, like the fuel vehicle, was insured, but the problem is that the structure of the new energy vehicle is completely different from that of a fuel vehicle. This means that important parts of new energy vehicles, including batteries, motors, and electrical controls, cannot be insured, resulting in difficulties in protecting consumers’ legitimate rights and interests.
For example, if a fire is caused by the battery and the battery is not covered by insurance, then consumers cannot claim compensation from the insurance company.
Therefore, previously in the event of a problem, the general process was that consumers pursued dealers, dealers pursued vehicle manufacturers, vehicle manufacturers pursued battery factories, and then the battery factory compensated the consumer.
However, this process has many deficiencies, such as determining the responsibility of the accident, which requires detailed investigation and evidence collection by government agencies or third parties, and the process also takes a lot of time. In addition, if it is determined that the battery is the cause, is it due to the quality of the battery cells, or the design of the battery pack by the automaker?
Jiang Qianyou told “The Electric Power” reporters that in general, after a new energy vehicle fire, it is difficult to determine the cause and responsibility of the accident, so there are many uncertainties in compensation.Also because it is difficult to determine the responsibility for new energy vehicle spontaneous combustion, users face great difficulties in claiming compensation, and of course there are various disputes involved, such as the vehicle manufacturer blaming the battery factory for substandard battery cells, and the battery factory blaming the vehicle manufacturer for unreasonable battery pack design, etc.
The turning point came in December 2021, when China’s first “Commercial Insurance Exclusive Clause for New Energy Vehicles (Trial)” (referred to as New Energy Vehicle Insurance) was officially launched on the market. This means that the rapidly growing new energy vehicles finally have independent insurance to ensure the industry’s stability and long-term development.
For users whose beloved new energy vehicles have spontaneously combusted, the launch of the New Energy Vehicle Insurance finally provides clearer and more practical protection, and they no longer need to track down whether it is the responsibility of the vehicle manufacturer or the battery factory. They can simply turn to their own insurance company.
From endless disputes to directly resolving problems with insurance, this is also a milestone in the progress of the new energy vehicle market.
Moving forward amid disputes
Compared to insurance for fuel vehicles, New Energy Vehicle Insurance can be said to be “tailor-made” for new energy vehicle owners.
In addition to the traditional vehicle components, New Energy Vehicle Insurance also includes coverage for the losses caused by vehicle fires, and the “three electric” systems (battery and energy storage system, motor and drive system, and other control systems), factory equipment and other hardware facilities are also included in the scope of coverage of the “model clause.”
Driving, parking, charging, and operating scenarios of new energy vehicles, as well as spontaneous combustion scenarios, are all covered by the insurance.
For example, spontaneous combustion during charging is an important scenario for new energy vehicle spontaneous combustion, and to better meet the insurance needs of new energy vehicle owners, New Energy Vehicle Insurance has specially designed three additional insurance options: external power grid failure loss insurance, self-use charging pile loss insurance, and self-use charging pile liability insurance.
Overall, the launch of New Energy Vehicle Insurance has effectively solved many consumer pain points. However, as New Energy Vehicle Insurance has just been launched and operated for nearly one year, there may still be some shortcomings.
It is reported that New Energy Vehicle Insurance is still at an early stage, so the overall cost may be higher, especially compared to fuel vehicles. This is why some users complained about the increase in insurance prices this year, but behind the price increase, there is actually more security.# Prices of Three New Energy Vehicle Policies Offered by Jiang Qianyou
On 1 July, a premium of 2816.04 yuan was generated for an electric car under the Geely brand; on 8 September, a premium of 3672.72 yuan was generated for an electric car under the BYD brand; and on 11 July, a premium of 4070.90 yuan was generated for an electric delivery truck under the Changan brand.
Frankly speaking, compared to lengthy disputes that occur after accidents, these three premium prices are actually acceptable.
Although new energy car insurance seems slightly more expensive than insurance for traditional fuel cars, in reality, some offered items have lowered their pricing. For instance, the premium for third-party liability insurance has decreased by 0.1% and the coverage for motor vehicle damage insurance has decreased by 1.2%, just to name a few. It can be seen that insurance companies have done some work to promote new energy car insurance in the market.
However, even with some concessions, insurance companies are still not making a profit from new energy car insurance. At the 2022 China Taibao mid-term performance conference, Zeng Yi, the general manager of Taibao Property Insurance, revealed that new energy vehicles insured by Taibao Property Insurance are still being operated at a loss, and new measures will be introduced in the future to lower the payout.
Perhaps for the purpose of expanding business space, some mainstream new energy vehicle companies are actively laying out insurance businesses. Compared to insurance companies, automakers have a better understanding of products and users, which will give them an edge. With the multiple contenders in insurance companies and automakers, the development of new energy insurance will undoubtedly be bigger.
Anyway, new energy car insurance is an important part of both users and the industry, and although the current prices have been criticized by users for being too expensive, with the continuous development of the industry, prices will eventually fall to a satisfactory level.
An expert in the battery industry told the “Electric Momentum” reporter that an important reason for the current high cost of new energy car insurance is data scarcity. For example, good batteries have less accidents than poor batteries. Thus, insurance companies will naturally reduce the insurance amount for good batteries.
This also reminds us that when buying a car, we should not only pay attention to the brand of the battery but also choose a good one.
In summary, for users, although new energy car insurance has been slightly adjusted upward compared to original insurance prices, thanks to clearer and more comprehensive protection, it will to some extent dispel concerns and to use new energy vehicles.
Therefore, when your new energy car catches fire, don’t waste time on meaningless disputes. What you should do is ask your insurance company how much compensation you can get.
Is Selling Insurance the End of Car Manufacturing?
From the above analysis, it is easy to see that insurance companies play a significant role in the development of new energy vehicles, as they can effectively terminate disputes between users, car companies, and battery factories after new energy vehicles catch fire.
Insight into this, the development of the entire industry has become clearer.
In the current electric vehicle market, both charging and swapping are developing rapidly and actively preparing for the explosive growth of new energy vehicles in the future. How to better solve the mileage anxiety and charging convenience for car owners has always been the top concern of energy companies such as CATL and NIO.
Following this trend, “separation of car and electricity” is also the trend. In fact, such a trend has already shown its trend.
According to the observation of the journalist of “Electric McKinsey”, after NIO successfully implemented the battery-swapping mode, it actually drove many companies to promote the “separation of car and electricity” mode.
Jiang Qianyou revealed to “Electric McKinsey” that in addition to car owners buying insurance for their own cars, some car companies actually give insurance for the batteries that come out of the factory, and battery factories also buy insurance for the battery cells. Therefore, in the event of a spontaneous combustion accident, whether it is due to the problem of the battery pack design of the host factory or the defect of the battery cell of the battery factory, it is ultimately borne by the insurance company.
Judging from the future iteration of electric vehicles, it is not difficult to see the close relationship between the whole vehicle and insurance. This may also be one of the considerations for many car companies to invest in insurance. The industry even joked: the end of car manufacturing is selling insurance.
Therefore, for users, in the “separation of car and electricity” mode, the car shell and the battery belong to different companies. If their new energy vehicle unfortunately catches fire or the battery encounters problems, the determination of liability will be entrusted to authoritative institutions, and consumers only need to bring their own insurance policies directly to the insurance company for compensation. Their energy will not be affected too much, and the insurance company will help consumers handle the follow-up compensation work.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.