Why electric cars will push up new vehicle prices

Rising transportation costs are set to increase once more, as all new vehicle buyers bear the brunt for international catastrophes.

Car prices could be about to rise again as insurance companies consider increased premiums for car-carrying cargo ships due to recent fires.

Leading vehicle importer Neville Crichton said the fire on the Fremantle Highway ship, which was carrying almost 3784 vehicles – roughly 500 of them electric – could raise the cost of new cars.

There was speculation the fire was caused by an electric vehicle, although some sources indicate it may have started elsewhere.

The car carrier ship Fremantle Highway caught fire in July 2023, killing one crew member. Photo: Netherlands Coastguards / AFP

John Frazee, managing director of insurance broker Marsh, told Reuters car companies were buying insurance to protect themselves from potential legal action pursued by concerned ship owners.

The Fremantle Highway fire followed a 2022 fire that sank the car carrier Felicity Ace.

Mr Crichton said that regardless of the outcome of the investigation into the most recent fire, price hikes would affect both electric and internal combustion vehicles, as they shared space on most car-carrying ships.

Salvage workers recover an electric Mercedes from the fire-stricken Fremantle Highway ship. YouTube/Eemskrant

Mr Crichton, who runs the ATECO group that imports vehicles from a range of manufacturers including Maserati, Renault, RAM and LDV, said that although “there’s no proof it was an electric car that caused the fire … the shippers are concerned”.

“They’re seriously looking at it at the moment. It will get passed onto us for sure.”

The Fremantle Highway caught fire off the Dutch coast at the end of July and had to be towed to land. The fire burned for almost a week.

Neville Crichton with the Ateco RAM 1500 in Sydney. Photo: James Croucher

Japanese shipping company Shoei Kisen Kaisha, which owns the ship, told reporters following the fire that “there is a good chance that the fire started with electric cars”.

Salvage expert Peter Berdowski told Bloomberg “the transportation of electric vehicles introduces additional risks”.

Shipping costs between China and Australia have already tripled following the coronavirus pandemic.

The Felicity Ace car carrier on fire. Picture: Marinha Portuguesa

Reduced availability of roll-on, roll-off car carrier ships has made companies such as ATECO and rival BYD importer EV Direct reliant on moving cars using shipping containers.

“We have been containing cars out of China because we can’t get them on to boats,” Mr Crichton said.

“It’s a massive labour-intensive program.”

Shipping delays have become such a problem for the local car industry that Ford Australia recently leased its own ship for three years.

The car carrier Felicity Ace caught fire in February 22. Photo: AFP / Portuguese navy

The fire sparked increased safety concerns around the transport of electric vehicles.

Research suggests that while electric cars are less prone to fires than internal combustion vehicles, they are harder to put out once they catch alight due to thermal runaway.

Experts estimate that the lithium ion batteries in electric vehicles – and most smartphones – burn with twice the energy of a normal fire.

A study by Austin Fire Department in the United States estimated that an EV could take up to 150,000 litres of water to put out, compared with between 1900 and 3800 litres for a petrol car.

Ford has leased its own ship, the Grand Quest, to streamline Australian imports.

New-car prices have soared since the pandemic due to increased material and transport costs. Australian car buyers have also suffered long delivery delays due to biosecurity-related processing problems at Australian ports.