UAE electric vehicle premiums cost 72% more than petrol cars

Average comprehensive EV insurance policy stands at about Dh4,992 a year

Toshita Chauhan says making the switch to electric vehicle ownership has paid off, despite steep insurance costs. Victor Besa / The National

Insuring an electric car in the UAE has become much more costly, after last year's record floods, but industry experts believe the future remains bright for the vehicle segment as sales increase.

Insurancemarket.ae, one of the country's leading providers, said insuring an electric vehicle on average costs 72 per cent more on average than a petrol or diesel-powered alternative.

Figures compiled by the company show the average comprehensive EV policy currently stands at about Dh4,992 a year, compared to Dh2,895 for regular internal combustion engine vehicles, when comparing vehicles of similar body type.

“Repair costs for EVs are higher due to specialised parts and battery systems,” said Hitesh Motwani, deputy chief executive of the insurance group.

“There are fewer authorised repair centres, and parts often have to be shipped internationally.”

The repair problems were brought into sharp focus by the unprecedented floods that hit the UAE in April 2024, when mass EV battery failures drove up insurance claims.

Yet Mr Motwani believes that the market is entering a “transition phase” that will see more nuanced pricing, factoring in battery age, charging behaviour and self-driving features.

“More insurers are also partnering with authorised EV dealers to streamline the repairs and claim services,” he said. “We’re watching the space evolve from novelty to norm – and as that happens, customers can expect more competitive, data-driven pricing, but also a need to be more informed buyers.”

EVs are expected to make up more than 15 per cent of all sales in the UAE by 2030, and could reach about 110,500 vehicles five years later, PwC's recently released Mobility Outlook report found.

The UAE has set an ambitious target of having EVs make up half of the cars on the roads by 2050, in support of the nation's net-zero drive.

Staying the course

When Toshita Chauhan took delivery of her Tesla three years ago, the choice was less about a moral stand on emissions than a hard-headed calculation.

“I wanted an SUV I could drive for the next decade,” said Ms Chauhan, chief business officer at another leading provider, Policybazaar.ae. “At the time, fuel savings, free charging for Teslas, and monthly instalments comparable to a petrol model made the decisions obvious.”

Today, with insurance premiums for electric vehicles on the rise, her budget is different.

“Back then, the cost difference wasn't much,” said Ms Chauhan. “But even factoring in that increase, I'm still saving on running costs. For two years, charging was free – I was paying nothing beyond road tolls and the odd car wash.”

Electric vehicle infrastructure firm UAEV is aiming to set up 1,000 charging stations by 2030 amid surging EV demand. Photo: UAEV

EV boom reshapes the roads

While the UAE's EV market has faced challenges, it has enjoyed healthy growth in recent years.

EVs made up 13 per cent of new car sales in 2023, up from 0.7 per cent in 2021, according to government data quoted by e-mobility specialist Heiko Seitz.

To put this into perspective, this is equal to between 28,000 and 33,000 new EVs, including plug-in hybrids, sold in 2023, compared to only a few thousand in 2021. “This marks one of the fastest adoption curves in the region,” said Mr Seitz.

Regionally, Mr Seitz told The National, this means that the UAE now leads the Middle East in EV penetration, well ahead of neighbouring countries where electric models still account for about one per cent or less of new car sales.

“Nearly two-thirds of UAE residents now say they intend to make an EV their primary vehicle by 2025, showing how quickly public sentiment is shifting in favour of more sustainable mobility,” said Seitz, the global eMobility leader at PwC Middle East. “A growing variety of EV models at accessible price points is helping to accelerate this adoption.”

Overcoming roadblocks

The UAE is quickly overcoming traditional barriers to EV adoption, particularly charging access, range concerns, and upfront costs.

As such, Mr Seitz believes that the conditions are “highly favourable” for ownership. “Running costs are a fraction of petrol, range anxiety is easing, and the variety of models at accessible price points is growing fast.”

In Abu Dhabi alone for example, a joint venture between Adnoc and Taqa aims to install 70,000 EV chargers by 2030.

Drivers can now also travel further with a charged battery, as many new EVs are able to cover distances of more than 400km on a full charge, with premium models exceeding 600km.

Maturing market to bring new realities

For drivers such as Ms Chauhan, the honeymoon period may be over – Tesla's once-free charging network now comes at a cost. A minor incident left her waiting for three months for a replacement bumper shipped from China. “If it had been major damage, that would have been a serious inconvenience,” she told The National.

Policybazaar's data reflects a shift in buying behaviour. There are more enquiries for brands from China, such as BYD, and for premium EVs from brands such as Mercedes and Volvo, as well a growing second-hand Tesla market. “We're also seeing that EVs aren't always the primary car in a household,” she notes. “People still keep a petrol car for longer trips or as a back-up.”

President Sheikh Mohamed and President Abdel Fattah El Sisi of Egypt witness the launch of Nio Mena, a partnership between Nio and CYVN Holdings, in 2024. Photo: UAE Presidential Court

Manufacturers push confidence

Concerns over insurance are temporary growing pains, as EV adoption grows and more data becomes available, said Roberto Lopes Da Silva, UAE general manager of electric car brand Nio.

“We expect pricing to normalise. Moreover, continued dialogue between insurers, regulators, and EV manufacturers will be key in bridging this gap and making EV ownership more accessible,” he told The National.

Nio's customers, he adds, are often “forward-thinking individuals who are enthusiastic about technology and sustainability, especially in the premium to luxury segment.”

For Mr Lopes Da Silva, this dynamic environment in the UAE means products must truly differentiate themselves, be it in range, technology, design, or customer experience.

He adds that the driving range of an electric vehicle depends on several variables, including the model type, battery capacity, and real-world driving conditions such as speed, terrain, and climate. For example, the Nio ET5 Long Range variant has a certified range of up to 615 kilometres. For daily use, under mixed driving conditions, customers can realistically expect between 500km to 550km on a full charge.

Toshita Chauhan in her Tesla electric vehicle. Victor Besa / The National

Evolving sector

As the UAE's EV market matures, infrastructure is expanding and resale values are expected to stabilise.

Ms Chauhan said she is committed. “Driving my Tesla has become second nature,” she said, describing the experience of driving a petrol car like stepping back in time.

With the UAE government's goal of half of the cars on the road to be electric by 2050 – she is expected to have a lot more company on the roads.