Electric vehicles are transforming the automotive landscape, but many fleet managers are hitting an unexpected roadblock: skyrocketing insurance premiums. While the long-term benefits of electrification are clear, the short-term insurance costs can be up to 25% higher than for traditional vehicles. So, what’s driving this trend?

In our latest episode Marc Spurling from Aon breaks down the complexities:

Why is EV Insurance So Expensive?
The insurance industry is grappling with what Aon calls "four megatrends"—weather, technology, trade, and people which complicate risk assessment for everyone. For EVs, this creates a few specific hurdles:

• Limited Historical Data: Compared to petrol or diesel cars with decades of claims history, EVs are still the new kids on the block. With less data to work from, insurers tend to play it safe and set higher premiums. As Marc puts it, "With limited data, trends are amplified into perceived substantial risks."
• Supply Chain and Repair Complexity: Modern EVs are essentially computers on wheels. A minor bump can damage sophisticated sensors or LIDAR systems, requiring specialist technicians and manufacturer-approved parts, both of which are in short supply. This complexity drives up repair costs and vehicle downtime, which in turn inflates insurance rates.

The Hidden Risk: Charging Infrastructure
Beyond the vehicles themselves, transitioning to an electric fleet introduces a new layer of risk that many fleet managers overlook: the charging infrastructure.

Property insurers are still cautious about the fire risks associated with EV charging, often imposing strict restrictions or hiking up premiums. Many businesses only discover these hurdles after they’ve started their electrification journey, leading to unexpected costs and delays. Furthermore, installing multiple charging points can strain a building’s power grid, and the space needed for a safe setup is often underestimated.

However, some forward-thinking companies are turning this challenge into a revenue stream. First Bus, for example, has created multi-use charging hubs that generate income by charging other vehicles during off-peak hours.

Is Data-Driven Insurance the Answer?
The idea that connected vehicle data would revolutionise insurance with pay-per-use models sounded promising, but the reality is more complicated.

Marc offers a sharp insight: "Data is the new oil, but crude oil needs to be refined to be useful, and the same goes for data." Early models that simply tracked mileage were too simplistic, three miles in central London carries far more risk than three miles on a rural motorway. Today, the focus is shifting to behavioural data to create a more accurate picture of risk.

What Are Smart Fleet Managers Doing?
Leading fleet managers aren’t waiting for the market to change; they’re taking control.

1. Embracing Early Adoption: Businesses already operating EV fleets are seeing the benefits of lower maintenance costs and improved reliability. As they build a positive risk profile, their insurance premiums are gradually coming down.
2. Practising Proactive Risk Management: Top performers work with specialised brokers to create tailored policies. By highlighting proactive measures like advanced driver training and vehicle monitoring, they can secure better terms.
3. Planning Infrastructure Early: A successful transition involves collaborating with property insurers and engineers before installing charging stations to address power, space, and safety requirements from the start.

The Road Ahead
Despite the hurdles, the future for electric fleets is bright. Advances in battery technology are reducing fire risks, and as the market matures, premiums are expected to stabilise.

Curious what goes into powering up the EV revolution? In the latest Auto Futurecast episode, we unpack the nuts and bolts of charging infrastructure with Asif Ghafoor, CEO of Be.EV.

Fast Facts from Our Conversation with Asif:

• Start-Up to Scale: Founded in 2021, Be.EV now operates across Greater Manchester, backed by £110 million from Octopus Energy Generation.
• Reality Check: Building charging sites isn’t plug-and-play—it involves site leases for 20-25 years, up to two years of development, and patient capital.
• Field Research: Be.EV’s team studies user behavior by spending hours in car parks, ensuring chargers fit people’s real routines.
• User Experience: Expectations have shifted:
• Early adopters loved to chat; today’s users just want quick, fuss-free charging.
• Supports contactless, app, and chip-and-pin payments to minimize friction.
• Auto-charge is the goal—a seamless, “just plug in and go” experience.
• Oasis Concept: The new Charging Oasis in Manchester breaks the petrol-station mold:
• Circular layout maximizes space and safety.
• Designed for how people actually behave during longer charging stops.
• Costs & Returns:
• £500K–£1M per site with a seven-year payback.
• Only 4% of cars are EVs now, but the real growth comes as numbers reach 30%.
• Lean core team (30–40 people); construction and maintenance are outsourced.
• Market Trends:
• Around 150 charge point operators in the UK—but consolidation is likely.
• Some seek site contracts first and hope funding follows; Be.EV secured funding up front for more stability.

Why It Matters:

• Cleaner Air: Cutting road emissions is core to Be.EV’s mission. Infrastructure is the foundation of a more sustainable transport future.
• Patience Required: Building for tomorrow’s demand means investing ahead of the curve and obsessing over the customer experience.

Want more?

We release a new episode every two weeks focussing on the latest trends in automotive, technology and the mobility space. Expect lots of talk around EVs, AI and AVs.

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The UK automotive market is at a turning point, with electric vehicles (EVs), new retail models, and Chinese competition reshaping the landscape. Ian Plummer, Commercial Director at Auto Trader, joined Auto Futurecast to share his perspective on affordability, consumer behaviour, and how retailers can adapt in this fast-moving environment.

⚡ EV Affordability and Adoption

• Price gap between ICE and EVs has narrowed from 36% to 23%.
• Greater model availability, especially under £30k, is driving demand.
• Used EVs are fuelling broader adoption.
• Salary sacrifice remains a powerful, underappreciated driver of uptake.

🔋 Multi-Life Vehicles and Residual Values

• EV depreciation steepened in early 2023, but stabilised once parity was reached with ICE.
• 2–5 year old EVs are now the fastest turning segment on Auto Trader.
• Longer lifecycles, refurbishment, and second-life battery value will underpin sustainable growth.

🇨🇳 Lessons from China

• China’s EV market is already at mass adoption—quality, affordability, and tech are givens.
• The new battleground is autonomous features, with “Level 2++” fast becoming the norm.
• Chinese brands are setting the pace in over-the-air updates, voice-first interfaces, and customer feedback loops.

🏪 The Future of Automotive Retail

• Despite challenges, UK retailers remain resilient, averaging 1.5% long-term profitability.
• Digital transformation and AI offer efficiency gains in finance, service booking, and lead management.
• Consumer-controlled booking tools (e.g., test drives) boost conversion by up to 50%.
• The biggest untapped opportunity? Retention of used car customers into aftersales and repeat purchases.

🧭 Key Takeaways

Retailers must rethink retention, embrace digital, and prepare for a more complex, multi-brand EV market. Success will come from meeting consumers where they are, whether on price, tech, or ownership flexibility.

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