You’ll save on gas in your clean EV, but you’ll likely pay more for repairs — and possibly insurance

You’ve just bought a new Tesla Model S that turns heads.

It’s sleek, fast and boasts the latest tech-enabled features. However, your EV might cost you more to insure than a standard gas-powered vehicle down the road. 

Matt Hands, VP of insurance at rate comparison site Ratehub.ca, says that while gas-powered cars may have more parts that require maintenance, the cost of maintaining an EV, on a per-part basis, can be more expensive — and lead to larger claims.

The most expensive component of an EV is its battery which is mounted to the floor of the vehicle’s chassis. Replacing an EV battery can cost between $5,000 and $20,000, depending on “the pack, size and manufacturer” of the vehicle, according to Recurrent, a website that publishes information and research on EV batteries. 

According to Daniel Ivans, an insurance expert with Ratesdotca, part of the higher cost can also be attributed to the specialized mechanics needed to repair an EV.

What’s more, a report from Morningstar DBRS released earlier this year suggests that Canadian EV owners could have to pay more in insurance premiums in the coming years as EV uptake increases. 

But not all EVs cost more to insure than gas-powered vehicles.

In 2023, Ratehub compared insurance quotes based on a 35-year-old male in Toronto with a clean driving history. The results found that some electric-powered models cost less to insure compared to their gas counterparts, such as the 2023 Hyundai Elantra (-6.86 per cent), 2023 Kia Soul (-10.40 per cent) and 2023 Honda Accord (-7.87 per cent).

Ratehub reported the widest margin for the 2023 Toyota Camry, which costs $34 more a month to insure than its electric version. 

The insurance company you work with can also impact your rate.

“The simplest answer is that more often than not, electric vehicles are probably going to cost a bit more to insure,” says Hands. 

However, gas savings alone might outweigh the higher premiums. According to a 2024 report from Ratehub, Canadians spend an average of $200 a month on gas alone. 

There are other strategies you can use to save money on insurance. First, the Government of Canada offers upfront rebates ranging from $2,500 to $5,000 for those who buy or lease an EV. 

Ivans adds that some insurance companies offer special discounts for EV drivers, which can shave off between “five and 10 per cent” on your policy premium.

For example, Aviva Canada offers a $2,000 subsidy to those who upgrade their gas-powered vehicle to an EV and buy EV insurance. 

Multi-line discounts for bundling your home and auto policies or multi-vehicle discounts for having two cars on the same policy can help you save even more money, which Ivans says can range in discounts of “between 10 and 25 per cent.” 

It’s also good to shop around.

“When you start getting into the category of having niche products, like collector cars and EVs,” says Ivans “you really want to do your due diligence and shop with as many providers as you can.”