In a report from Epoch Times on September 9, 2025, it was highlighted that the number of Chinese owners purchasing new energy vehicles has been increasing annually. However, a growing number of owners have expressed regrets. The high premiums, difficulty in obtaining insurance, and rapid depreciation are the main reasons cited. Many drivers have mentioned that the money saved on fuel with new energy vehicles ends up being spent on insurance. On the other hand, insurance companies providing coverage for new energy vehicles are facing challenges of operating at a loss.
The issue of expensive premiums for new energy vehicles is not unique to a single owner. For instance, a Shanghai-based owner with several new energy vehicles, including the expensive NIO ES8, reported a yearly premium exceeding 10,000 yuan. Similarly, the first-year premiums for vehicles like the 100,000-yuan Lixiang B10 were around 5,500 yuan, while the 200,000-yuan Aita 06 and the 300,000-yuan Tesla Model Y L had premiums of about 8,000 yuan and 8,900 yuan respectively.
Complaints about high insurance premiums for new energy vehicles are widespread on social media platforms. An article titled “People who can afford new energy vehicles are struggling to afford insurance” shared on a WeChat public account recently reflects the frustration of owners. The post mentioned a personal experience of a five-year-old new energy vehicle whose insurance premium jumped from 10,000 to nearly 12,000 yuan annually, with the vehicle’s value plunging substantially in just a year.
Such occurrences are not isolated cases. According to a 2024 report by the China Automobile Dealers Association, the residual value of five-year-old new energy vehicles generally ranges from 30% to 40%. In contrast, traditional fuel vehicles of the same age tend to retain a residual value of over 50%. This disparity has made second-hand dealers wary of accepting new energy vehicles, which depreciate rapidly and present concerns about battery life and technological advancements.
For instance, the blogger “Wang Guidance on Cars” shared that the first-year premium for their Xiaomi SU7 was 6,700 yuan, but this doubled to 11,400 yuan the following year without any claims made. These trends are reinforced by a report from China Yinbaoxin that revealed an average 21% higher insurance premium for new energy vehicles compared to traditional fuel vehicles, with electric vehicles having premiums 1.8 times higher than their fuel counterparts on average.
Moreover, the cost of running a new energy vehicle compared to a fuel vehicle varies depending on mileage. Individuals driving lower annual distances might find the cost advantage lies with fuel vehicles, whereas those covering higher mileage may benefit from lower overall costs with new energy vehicles, despite the higher insurance premiums.
The challenges don’t end with high premiums; insurance companies are increasingly denying coverage for new energy vehicles. One dealer in Zhengzhou, Henan province, noted that difficulty in obtaining insurance for such vehicles has expanded to the entire logistics sector, impacting various types of new energy commercial vehicles.
As owners continue to voice their concerns about escalating premiums, insurance companies are also grappling with mounting losses. The China Actuarial Association reported that in 2024, the insurance industry bore losses of 5.7 billion yuan on insuring over 31 million new energy vehicles, contributing to a streak of consecutive annual losses. Among the 2,795 vehicle models covered, 137 had payout rates exceeding 100%.
The underlying reasons for the high payout rates in the new energy vehicle sector are multifaceted. Industry experts have pointed to safety risks associated with electric vehicles, such as the potential for self-ignition and explosions that can cause extensive damages, including neighboring vehicles in parking garages.
Regarding maintenance costs, the lack of competition and monopolies in the industry have significantly contributed to the high costs. The proprietary nature of parts and restrictions on access to diagnostics and repairs outside of authorized dealerships further drive up expenses for owners.
Recent developments involving prominent Chinese automakers like BYD, Zeekr, XPeng, Smart, and Leapmotor facing penalties in Australia for not adhering to regulations on sharing vehicle diagnostic software and technical information with independent repair shops underscore the complexities of the situation.
In a video shared by the blogger “Xiaopeng Talking Cars,” it was noted that the repair costs for new energy vehicles are significantly higher compared to traditional vehicles, with certain damages requiring entire component replacements instead of simple repairs, resulting in substantially higher bills.
Furthermore, the fragile nature of new energy vehicle batteries poses a significant risk, with even minor damages potentially leading to sizable insurance claims. One example cited involved a minor accident resulting in damage to the battery, prompting an insurance payout of over 90,000 yuan, representing a significant portion of the vehicle’s value.
The China Yinbaoxin report asserts that in addition to high repair costs, mismatches between vehicle usage characteristics and insurance prices, as well as increased accident rates and inadequate risk assessment, contribute to the challenges faced in insuring new energy vehicles.