UAE: Why electric vehicle insurance costs are now 72% higher than petrol cars

Time of India

2 days ago

Electric vehicles (EVs) in the UAE are gaining significant traction, but their insurance premiums remain substantially higher than those of petrol cars averaging 72 per cent more. This cost disparity, driven by repair complexities and flood related damages, presents challenges in a rapidly expanding EV market backed by rising sales, infrastructure development, and growing consumer interest.
Rising insurance costs reflect repair complexities and market transition
The average annual insurance premium for electric vehicles in the UAE has reached approximately AED 4,992, compared to AED 2,895 for petrol or diesel cars. This 72 per cent gap is primarily due to higher repair costs, particularly for specialised components like batteries, which often require international sourcing and limited local repair expertise.
Speaking to
The National
, Hitesh Motwani, deputy CEO of insurancemarket.ae, explained that specialised components such as EV batteries often require international shipping, and the limited number of repair centres in the UAE is driving up claim expenses.
The April 2024 floods exacerbated these issues, causing widespread battery failures and adding further pressure on insurers. As the EV sector matures, insurance pricing is expected to evolve, with data-driven models that consider factors like battery condition, charging habits, and vehicle technology. Insurers are also beginning to work more closely with authorised repair networks to streamline claims and reduce long-term costs.
EV adoption and infrastructure expansion
The UAE has emerged as a regional leader in EV adoption, with electric vehicles accounting for 13 per cent of all new car sales in 2023 up from just 0.7 per cent in 2021. This represents between 28,000 and 33,000 new EVs, including plug-in hybrids, entering the market within a single year.
A growing range of affordable electric vehicle models and rapid expansion of charging infrastructure are key drivers behind the UAE's rising EV adoption. Market data shows a clear shift in consumer preference, supported by improved accessibility, enhanced battery technology, and ongoing government and private sector investments in clean mobility.
Notably, Abu Dhabi's joint venture between Adnoc and Taqa aims to install 70,000 EV chargers by 2030. Battery advancements now enable many EVs to travel over 400km on a single charge, with some premium models exceeding 600km, helping address range anxiety.
Used EV market and battery confidence support market expansion
The UAE's used EV market is also growing rapidly, bolstered by increased supply, improved affordability, and wider consumer acceptance. Online platforms are reporting a rise in demand for pre-owned electric vehicles, with a diverse range of options including both budget friendly Chinese brands and premium European models.
Buyers are now more focused on battery health, warranty status, and charging compatibility. Longterm battery warranties, typically covering up 8 to 10 years, have helped ease concerns about degradation. New battery certification tools are also boosting transparency and buyer confidence in the secondary market.
Industry optimism and long-term market outlook
Despite current challenges, industry experts view high insurance premiums as a temporary issue. Greater availability of vehicle data and closer collaboration between insurers, regulators, and manufacturers are expected to help stabilise costs over time.
Electric vehicle manufacturers continue to focus on innovation in range, design, and user experience. For instance, premium models now offer certified driving ranges above 600km, with real world usability often between 500 to 550km per charge.
As charging infrastructure expands and resale values stabilise, luxury EVs like the Porsche Taycan retain 80 to 82 per cent of value after three years electric vehicle ownership is becoming increasingly viable. These developments align with the UAE government's goal of having 50 per cent of vehicles on the road be electric by 2050.