Why electric vehicles (EVs) are here to stay

About 10 years ago, a customer asked us to insure his theodolite. It was a unique request as we are not usually in the habit of insuring theodolites. They are a land surveying tool, and this one was clocking in around $30,000.

I wasn’t entirely convinced the arrangements with our suppliers for contents claims was up-to-the-job of finding him a new one if something went wrong. I also didn’t think our products stood up well to insuring theodolites for business purposes. I wasn’t sure that the future was about consumer-level theodolites either. Mattel weren’t advertising junior theodolites for the excitable young surveyor in the family. We said no, and that was that. I haven’t been asked since.

So, what about when the first person phoned up to insure a drone? We probably said no. What about when the second person phoned up? And the third?

Across our Product and Underwriting teams, we are in constant contact with our people who speak to customers every day. Customers and staff are always asking about new objects appearing in the world, in the same way they would have asked about drones and smartphones for the first time.

These teams also pay attention to what appears on competitor websites, stories appearing in the press, and what is generally going on in the world, to help us spot the next thing the mass market consumer is going to want to insure.

One customer must have been the first to ask about electric vehicles (EVs), and I’m sure we’ll find a recording of that very call if we go looking.

EVs are not a fad. EVs are a change to the vehicular world like we haven’t seen for nearly 100 years.

By the 1930s the blueprint for the basic design of the chassis, body and engine of the motor car had been laid. Since then, everything has been continuous improvement. The wholesale changing of the source of drive from petrol to electricity, and the mass market adoption of it, is an innovation of significance. And the adoption of that change will be huge due to the reducing costs, the social implications, the environmental implications and the political engineering going on alongside.

The New Zealand Government is trying all sorts of ways to move people over to EVs. They have set targets, raised fuel taxes and even trialled EV priority in the transit lanes.

In Japan, there are now more EV refuelling stations than there are petrol stations. It was recently announced that the Tesla Model 3 was the best-selling car in the US during August.

Changes seen in major markets like the US and the UK are changes we can be reasonably certain of here in New Zealand. This means AA Insurance must be a company that is wholly behind EVs, the insurance needed for them and, in turn, the repairers needed in the future to fix them.

So, why would people move to EVs? Well, we must look at what drives changes in human behaviour across the modern world. In countries where problems of lifespan, health, poverty and accommodation have largely been solved, the two biggest drivers of change are time and money.

We want more for less and we want it done faster. EVs have 10 times the potential mileage of ICE (internal combustion engine) vehicles. They also have 10 times fewer moving parts and are much less susceptible to breaking down. Finally, the move across the globe away from fossil fuel to renewable sources of energy means renewable generation of electricity is already, today, lower than the cost of generating via fossil fuel. In other words, it won’t cost $100 to fill your tank. It will cost $10.

If you have a vehicle that lasts 10 times as long, travels 10 times further, and costs 10 times less to refuel, what do you think is going to happen?

EVs are here to stay, they will grow, and you will very likely own one - one day!

As for what’s next, well, perhaps we’ll need to start insuring something in here? https://en.wikipedia.org/wiki/List_of_emerging_technologies

Aaron Dickinson

GM Strategy, Insights & Analysis, AA Insurance

About AA Insurance

AA Insurance is an independently operated, New Zealand-based joint venture between the New Zealand Automobile Association (NZAA) and Vero Insurance New Zealand Limited (VINZL). Since 1994 we have demonstrated trusted expertise in home, contents and car insurance in New Zealand, and in 2018 introduced commercial small business insurance. We underwrite our own policies and sell direct to New Zealanders. Our 930+ staff look after over 480,000 customers with 970,000 policies.

We proudly partner with Variety NZ and Eden Park and have been consistently recognised by: Reader’s Digest Most Trusted Brands (since 2011) and Quality Service Awards for Car, and Home and Contents Insurance (since 2015), Kantar Customer Leadership Index (since 2019), Canstar Blue Most Satisfied Customers (2011-2018), and the Colmar Brunton Corporate Reputation Index (since 2015) that recognises New Zealand’s most successful companies. AA Insurance was also named Consumer NZ People’s Choice award winner for car, home and contents (2019 and 2020).

AA Insurance has an AA- (Very Strong) Insurer Financial Strength Rating given by Standard and Poor’s (Australia) Pty Ltd. For further information visit aainsurance.co.nz.

For more information please contact:

Rachael Joel, Botica Butler Raudon Partners, (09) 303 3862, 021 403 504 or rachaelJ@botica.co.nz

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