Crashed Tesla models with low mileage are disassembled because they are too expensive to repair

To repair or not to repair? That's the question many owners of broken Tesla models face…

Electric vehicles are currently so expensive to repair that many high-end insurance companies are writing off low-mileage models and sending them to salvage auctions, according to a recent Reuters analysis.

Of more than 120 Model Ys involved in traffic accidents that went up for auction in December and early January, most had less than 10,000 miles on the odometer, according to online data from auction houses Copart and IAA.

Insurers typically total the car – that is, take it apart and reimburse the owner – when the estimated cost of repairs is greater than the vehicle's actual cash value. Retail prices for the aforementioned cars, which were either 2022 or 2023 models, ranged from roughly $60,000 to more than $80,000. Some estimated repair costs were just below that, according to Reuters.

For example, the 2022 Model Y Long Range that was involved in a head-on collision and was auctioned by the IAA in early January had a retail price of $61,388 and an estimated repair cost of $50,388. The other Model Y that suffered a side impact had a retail price of $72,667 and an estimated repair cost of $43,814.

During Tesla's fourth-quarter earnings call on Wednesday, CEO Elon Musk said the automaker is making changes to vehicle design and software to reduce repair costs and insurance premiums. With electric vehicles so technologically advanced, even minor bumps and scratches can cost a fortune to repair.

"It's amazing how small changes in bumper design (and) provision of replacement parts needed to repair a crash can have a huge impact on the cost of the repair," Musk explained. "Most accidents are actually minor - a broken bumper or a scratched side of the car."

The CEO added that premiums from third-party insurance companies "were unreasonably high in some cases." He said the company is trying to counter that by offering lower prices to Tesla owners. To recap, Tesla launched its own insurance arm in August 2019, promising rates up to 30 percent lower than competitors.

However, expensive repairs and premiums did not hinder Tesla's popularity. It was the best-selling electric and luxury car maker last year. It also posted nearly $3.7 billion in profit and $24.3 billion in sales in the last quarter of 2022. That's a 59 percent increase, or a 37 percent year-over-year increase. That's certainly something Musk can laugh about.