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Insurance companies prep for EV adoption and autonomous vehicle tech advances

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With President Joe Biden’s electric vehicle initiative backing the development of electricity-powered cars and the EU declaring a ban on the sale of new carbon-emitting cars, starting in 2035, the auto industry is tilting increasingly toward an environmentally conscious and tech-savvy market. By incorporating modern technology into the way cars are manufactured, fully autonomous vehicles could be the next big thing to transform the auto space. 

In addition to the environmental benefits of EV adoption, carmakers are turning toward the development of electric vehicles to simplify production processes: EVs are in some ways mechanically simpler than gas-powered vehicles. Their drivetrains employ fewer than 20 moving parts, compared with the hundreds used by gas-powered cars, and manufacturers can use the same battery cell layouts and motors to power a range of electric models. 

Stellantis, the world’s No. 4 automaker, predicts that more than 40% of U.S. car sales will be electric cars by 2030. The company announced it would invest $35.5 billion through 2025 to electrify its lineup. With the support of five battery plants across Europe and North America, the company stated each 14 of its vehicle brands will offer fully electrified vehicles by 2030.

Electric vehicle adoption facts

Automakers invest in autonomous vehicle technology

Concurrent with the development and popularization of electric vehicles, autonomous driving technology is shaking up the auto market. Volkswagen AG’s CEO Herbert Diess stated that autonomous driving technology is the true industry disruptor. Consulting firm AlixPartners expects the cost of highly and fully autonomous systems to drop at least 60% by 2030 to enable broader use cases. 

Autonomous vehicle development is still in its early stages and still has several hurdles to overcome, including questions around liability, traffic regulations, insurance policies and owner and operator responsibilities. In addition, getting consumer buy-in and building trust is a challenge. But with advanced driving support systems like lane-keeping assistance, blind-spot warnings and smart cruise control already available in many new cars, autonomous cars have emerged at the forefront of automotive research and development. 

As autonomous vehicles gain momentum, automakers are looking for ways to consolidate and control costs. Tesla, for example, is offering its own insurance and building their own roadside assistance service networks, as a way to control the end-to-end customer experience throughout the entire ownership lifecycle.

Tech companies try the car business on for size

Major technology companies have waded into the autonomous vehicle market, blending the lines between consumer tech and auto tech. 

As electrification and autonomy continue to advance and create smarter — and hopefully safer — cars, insurers have explored ways to modernize claims processes and rate setting. The ability to access car data and use AI-powered analytics may streamline underwriting. In the long run, advanced tech could serve as a competitive advantage that enables carriers to thrive in the emerging world of automotive technology and car insurance.

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Jasmine KimB2B Content Manager

Jasmine is The Zebra’s newsroom content writer. With a background in journalism, she reports on breaking news, trends, mergers and acquisitions, and financial reports related to the insurance industry.