In recent years market of electric vehicles in United Arab Emirates (UAE) experiences significant growth. This is connected with increase of interest to environmentally clean transport means and support from state. Discuss main trends and problems, and also possible paths of their solution.
1. Ascending Trend of the Market of Electric Vehicles in UAE
1.1 Unprecedented Growth of Sales and Political Support
In recent years, the spread of electric vehicles has reached unseen heights in the United Arab Emirates (UAE). Indicators of sales jumped by 45% in annual expression, which testifies to the growing interest of the population in ecological transport means. Such trends are supported by the government, which actively implements initiatives, such as up to 15% tax benefits, free parking places, and exemption from road fees. As a result, by 2025 year it is expected that electric vehicles will compose 20% of the general number of cars on the roads of the country. Find out more about insurance in Dubai.
1.2 Development of Charging Infrastructure
Infrastructure for charging electric vehicles constantly expands, which makes them more accessible to a wider audience. Today, in the UAE, there are about 400 charging stations, and it is expected that this number will increase to 1,000 by 2028 . State and private companies invest significant amounts in strategic placement of charging points in densely populated areas and along main highways. This not only simplifies the lives of owners of electric vehicles but also promotes the reduction of the level of air pollution.
2. Main Insurance Problems on Market
2.1 High Cost of Insurance Policies
There exists a clear gap in the cost of insurance for owners of electric vehicles: their insurance will cost more by 15% in comparison with traditional cars of similar class. This is connected with the perception that electric vehicles represent a greater risk due to the expense of possible repair and the cost of spare parts, which can reach 30% of the cost of policy. The problem is aggravated by a lack of information about the specifics of technical maintenance of such cars.
2.2 Limited Offer of Specialized Insurances
On the market of insurance, there exists a noticeable deficit of products aimed specifically at owners of electric vehicles. From 50+ insurance companies, only 5% offer specialized packages for electric vehicles. This limits the possibility of owners of electric vehicles choosing suitable insurance solutions, often limiting their choice to general and less beneficial conditions.
2.3 Uncertainty in Standardization
In the UAE, there are no standardized approaches to insurance of electric vehicles, creating disarray in the conditions of insurance policies. Differences in insurance rules can vary up to 25% between offers of different companies, which causes confusion and additional complications for owners and insurers.
3. Insurance Practice Abroad: Examples of Success
For optimization of the insurance market of electric vehicles in the UAE, it is worth studying international experience. In Norway and the Netherlands, for example, insurance companies offer diverse specialized products, considering unique aspects of electric vehicles. In Norway, the amount of hybrid and electric vehicles paper reaches 54% from all sales of new cars, and insurance premiums can be lowered by 15% thanks to target products. More about electric vehicles.
4. Justified Strategies and Recommendations for Insurance Market
4.1 Introduction of Legislative Initiatives
One of the key steps is the introduction of changes in legislation. New laws can oblige insurance companies to consider the specifics of electric vehicles when developing products, establishing minimum standards of insurance coverage, and stimulating programs. This will support a more uniform and fair distribution of insurance premiums.
4.2 Creation of Specialized Products of Insurance
To reduce the cost of insurance and expand accessibility, it is necessary to offer specialized insurance solutions. Programs should consider the features of electric vehicles, such as costly batteries and the charging infrastructure. This direction can become the main driver of the reduction of the cost of insurance policies by 10% in the coming years. Find out more about Legislative initiatives in UAE.
4.3 Increase of Awareness
To solve current problems on the market, it is necessary to increase awareness among all participants. Educational events, such as seminars and conferences, will help to share actual cases and practices, simultaneously promoting the development and application of strategies aimed at solving problems.
5. Positive Forecasts of Development of the Market of Electric Vehicles and Insurance in UAE
Based on observed trends and expected legislative changes, forecasts indicate a brighter future for the market of electric vehicles in the UAE. Gradual growth of a number of electric cars on roads will lead to the expansion of the insurance business, offering more accessible and adapted products to the needs of clients. Further development of charging infrastructure will also stimulate mass transition to electric vehicles, playing the role of a catalyst for changes in the country’s transport system.
In conclusion, despite existing challenges, the market for electric vehicles in the UAE has significant potential for expansion. The solution to insurance problems will allow electric vehicles to be maximally accessible and thus even more attractive for the population of the country. This also will become important step towards achieving ecologically sustainable future on national level.
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