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Keeping up in the EV era: 4 key challenges and strategies for auto companies

The automotive ecosystem is at a tipping point: new electric vehicle (EV) entrants are reshuffling the landscape, tech is transforming cars into an extension of our digital world and mobility-as-a-service is becoming an even more common answer to evolving consumer behaviour.
Automotive & mobility
Words by
Alex Vickery
Time to read
9 minutes
Last updated
April 17, 2023
In a nutshell
  • To combat hesitation around EV ownership due to increased cost of ownership and technology risk, auto brands can provide an ecosystem of value-added services, including insurance programs and flexible usage options such as operating leases, car sharing and subscription models.
  • By bundling products and services, such as insurance, OEMs and mobility platforms can offer more comprehensive solutions and generate new revenue streams in a more competitive market.
  • Companies can leverage EV telematics data to provide more customised mobility solutions – including insurance, energy management and maintenance – to drive down total cost of ownership.
  • Customers want access to services where they want, when they want. Both traditional and new OEMs should master an omnichannel customer experience, from physical showrooms to a smooth digital journey.

All of this is forcing traditional original equipment manufacturers (OEMs) to seek out innovative ways to maintain a competitive edge.

Not to mention an increasing amount of government incentives and restrictions that are making electric vehicles look more and more enticing and even necessary.

How can automotive and mobility players capture these EV-driven opportunities? How can they better harness the power of tech to meet changing consumer expectations? And ultimately, how can OEMs embrace all of these changes to not only keep up with, but stay ahead of, the game?

In our first automotive & mobility webinar, we spoke to three experts about how the EV boom is impacting the auto ecosystem and how OEMs, fleet operators and mobility platforms can leverage these emerging technologies to keep up.

WATCH: Full webinar replay here → 

woman uses tesla touch screen with qover insurance

1. Providing flexible mobility-as-a-service options to combat hesitation around EV ownership

Electric vehicles come with a side of ‘technology risk’. Not only are they more expensive than a traditional ICE vehicle, but there’s uncertainty around how much an EV will be worth a few years down the line.

Alejandro Ortega, Insurance Services Lead Volta Trucks

‘If a fleet operator is buying a new kind of truck, such as an electric Volta Zero, not only does it come from a new OEM, but it's something completely new: the cabin and design are different; it operates in slightly different ways,’ said Alejandro Ortega, Insurance Services Lead at EV manufacturer Volta Trucks.

‘When a fleet operator adds this asset to their fleet, it’s probably the most significant investment for someone in the logistics business,’ Alejandro explained ‘If you compare this to a traditional truck or vehicle that's been in the market for several years, you can make predictions, i.e. if I depreciate my vehicle over eight years, I know how much I can sell it for afterwards.’

This uncertainty and concern about cost is leading more and more customers to opt for a long-term rental or operating lease.

‘The customer uses the vehicle for a long time, but it's always owned by a leasing bank,’ Alejandro adds. ‘The owner returns the vehicle at the end of the leasing period, but the bank is assuming what the residual value is at the end of the lease – which means that the customer pays less than the total value of the vehicle during the leasing period. As banks own more and more vehicles, they become the actual fleet owners.’

‘Then you start bundling the operating lease contracts with maintenance and service contracts to make sure that the vehicles are well taken care of and you maximise the residual value during the leasing period. This generates a positive cycle in which leasing companies manage to get higher residuals so that they can help customers pay less during their lease – and thus the technology risk is completely removed from customers.’

Antonela Duncan, Financial Solutions Director at VinFast Europe, agreed that leasing is helping customers cope with their concerns about EV ownership.

‘Leasing was traditionally used to help OEMs sell more’, she says, ‘but today we approach it from a different perspective. We use certain elements of the financial product to remove some of the customer’s stress.’

Antonela emphasises the need for flexibility. For example, allowing customers to turn in their car earlier or helping them to better understand how they’re running their car. Whereas traditional residual values were based on mileage and age, how you drive your car and so on, EVs operate differently.

It’s also important to recognise that buying an EV is a very well-thought-out decision. Buyers will think about the total cost of ownership (TCO) – which includes financing and other related costs such as insurance, maintenance, etc. – versus the benefits.

What adds complexity is the EV approach to pricing, she explained. With an ICE car, each part has its respective price.

‘With EVs, the most critical part is the battery’, she explained, ‘which sometimes represents up to 30% of the price. Let’s imagine you change the battery – what is the value of that car?’

‘It’s necessary to take that into consideration when evaluating and forecasting the values of those cars, and introduce that into the value of the financial products you’re proposing.’

In addition to long-term leasing, many providers are incorporating car subscription and car sharing services in order to give customers the added flexibility they’re looking for. With these types of value-added services, customers actually purchase a full suite of services: financing, insurance, maintenance, extended warranty, etc. 

Bastien Paret, Head of Insurance Programs and Partnerships at Mobilize Financial Services

‘At Mobilize, we’re investing a lot in new subscription models and car sharing in order to offer this full range of mobility services,’ Bastien Paret, Head of Insurance Programs and Partnerships at Mobilize Financial Services, the financial partner of the Alliance Renault-Nissan-Mitsubishi brands. ‘We’re selling cars up to kilometres in a way. Financial services play a big role in that. Operational leases are becoming a bigger part of the market, but we’re going much further than that and looking into even more flexible ways of accessing mobility.’

2. Bundling insurance products to offer more comprehensive mobility solutions

‘People don’t necessarily want to own a vehicle, but they want to access them at certain moments in their lives,’ Bastien says. ‘This is an important change because it means more flexibility in the way of accessing cars or mobility services.’

‘This, in turn, has a big impact on financial services, and insurance in particular, because our customers want comprehensive solutions – not only having access to a car but being able to have all their products bundled together.

‘Insurance is very important for us, simply because we want our customers to enjoy their mobility safely,’ he adds. ‘Secondly, we do really believe that as OEMs, we have a bigger role to play in the car insurance environment because we see that we can bring more value to our customers in that area.’

OEMs have a unique opportunity to sell insurance when customers buy a car or just before their car is delivered. This can generate new revenue streams and contribute to long-term customer engagement and satisfaction.

OEMs know their cars and customers, Bastien explains, and with the right partners they can offer better, more tailored products – all integrated within their brand environment.

‘That would make it easier for customers to find the right insurance solution for them, and find the right price for their car and way of driving.’

READ MORE: How a shifting ecosystem is driving innovative insurance for OEMs and mobility platforms →

Antonela Duncan, Financial Solutions Director VinFast Europe

‘When you have a computer on your wheel, you can definitely do more to make sure that what you have as a driving experience and insurance product is in line with your behaviour [more on that later],’ Antonela says. ‘And that's important for us. We're definitely looking to work with professionals to create the best insurance product for our customers.’

By offering comprehensive solutions, she adds, you can make sure that customers have easy-to-understand financial products at their fingertips.

3. Leveraging EV telematics data for more customised mobility solutions

A big conversation around connected vehicles is, as Antonela just hinted, generating value-added services with data.

Electric vehicles are generating a huge amount of telematics data that can be harnessed to offer more personalised products and services, as well as reduce TCO.

In the case of a fleet operator, Alejandro says, that can mean giving customers access to ‘relevant data so they can make better decisions and continue to optimise their operations’.

‘Telematics is nothing new, especially for fleets,’ he adds. ‘Fleet operators have been using telematics data for a long time, especially to optimise fuel consumption. In some cases they've been able to retrain, refocus or change driver behaviours to reduce fuel consumption 10 to 20%.’

‘When we move to electric, energy is still a part of the TCO, but it's at least half of what diesel used to be. So a new strategy to help customers and fleet operators optimise TCO is fundamental.’

‘One of the first things we can think about is definitely insurance. Telematics insurance or usage-based insurance is becoming more and more common and it's very simple. You assess a driver’s behaviour, you see how safely they’re driving and you use this as a parameter of an insurance pricing model. Safer drivers pay less for insurance, right? From what I’ve seen, this is more common in the US than in most European countries.’

READ MORE: how fleet businesses can stand out by offering new types of services →

Along with optimising energy use and insurance, telematics can also play a role in vehicle care and maintenance. 

‘It all starts with tracking how the driving is being done,’ Alejandro says. ’How much damage are you generating to wear and tear parts, for example? If you take good care of it, you reduce maintenance needs. And this, with the right formula, could translate into lower maintenance costs.’

From a financing point of view, if you take good care of the vehicle you’re leasing, your residual value is higher. If you track this through driving scores, you could reduce the cost of the operating lease.

‘Telematics really opens the door to new ways of thinking: how we can help fleet managers or even individual customers optimise the TCO, especially in the new context of usage versus ownership,’ Alejandro says.

OEMs and mobility platforms can not only take advantage of important telematics data for their customers, but also for the ecosystem as a whole.

‘We [at Mobilize] believe there are opportunities to leverage that mobility services data and offer services to the entire ecosystem to enhance the sustainable mobility of our customers,’ Bastien says.

4. Mastering a seamless omnichannel customer experience

All of the mobility services and strategies we’ve mentioned need to exist within an omnichannel universe.

For OEMs – which tend to rely heavily on physical locations – that means making sure customers can access all financial services where they want, when they want.

‘More and more, our customers want to be able to access mobility services any time, anywhere,’ Bastien says.

‘Being an OEM like ourselves with a big, physical presence in dealerships, we need to be present in those outlets – but our customers also want to access their services digitally. So we need to have this experience for them that is very fluid and very seamless between the physical world and the digital world so that they can enjoy their mobility.’

With new OEMs however, it can often be the other way around. Antonela says that the digital experience is considered to be their ‘biggest show’, with much of their customer behaviour originating online.

‘The customers transitioning to EVs are looking for different things than an ICE customer. Back then, a customer would go to a dealership, get emotionally attached or have a crush on a car and then look at the price,’ she says. 

Now that price is a bigger factor with EVs, customers take a bit more time, Antonela adds. ‘They think about it, they watch videos – so you need to offer the customer more so that they say, hey, I want to act. I want to be able to order my car. And I would like to be able to do that from my couch at 10 o'clock in the evening with – probably not a beer – let's say a glass of red wine.’

Not only is it important that customers can order their car online, but that the process is as painless as possible.

‘Easy, simple, a couple of clicks – not a huge, complex process,’ Antonela says. ‘And that’s end to an end, so from the moment you order to all the services that come with it. The financial solutions that we’re adding to both the digital and store journeys are simple and comprehensive.’

WATCH: see how one EV brand sells insurance online to their customers --> 

However, because EV sales cycles can be longer than traditional internal-combustion engine (ICE) vehicles, it’s still important that customers have hands-on interactions with their cars, Antonela adds.

There are added complexities that come with adopting new tech. Customers may have questions about how charging capacity may affect their autonomy and lifestyle. Or who will come to their aid if they’re stuck on the side of the road. Or if this tech they’re about to invest in will still be relevant in a few years.

‘As an OEM’ Antonela says, ‘you need to be able to support customers in their reflection, help them digest that information and answer their questions.’

To that end, VinFast organises EV days, or electric workshops in their physical showrooms where they sit down with customers and explain the EV ecosystem and how an EV will impact their daily life. 

Conclusion: Gain a competitive edge

It’s clear that the auto ecosystem is in a period of extreme transformation. The rise of EVs is one part of the equation, but so is changing consumer demand and mobility-as-a-service.

Traditional and new OEMs can tackle these challenges head on by creating their own environment of value-added services, including flexible usage options, maintenance and insurance.

They can also leverage telematics data collected through connected cars to provide more customised mobility solutions and drive down cost of ownership.

By using these strategies, OEMs and mobility platforms can gain an edge in today’s competitive market.

Learn more about our insurance solutions for automotive and mobility players.