In the wake of needed fundraising and numerous spontaneous combustion issues Tesla Plans to Sell Owners Cheaper Car Insurance.
Tesla Inc. is creating its own branded insurance program, a move the electric-car maker believes will enable it to offer a lower-cost product to drivers.
Tesla Chief Executive Elon Musk has been working with a unit of Virginia-based Markel Corp. and another company, which hasn’t been named, to offer the branded insurance, according to Markel and regulatory insurance filings in California, where Tesla is based.
Mr. Musk said buyers would have “to agree to not drive the car in a crazy way.” If they do, their insurance rates would be higher, he said. He said he hoped to launch the insurance offering within a month.
A 2019 report from QuinStreet Inc. unit Insure.com—a consumer insurance information website—ranked the Tesla Model S as the 15th most expensive car to insure in the country, with an average annual insurance paid of $3,300. The Nissan GT-R was the most expensive at $3,941. Numerous BMW and Mercedes models ranked ahead of the Tesla vehicle.
Count Warren Buffett—owner of auto insurer Geico—as a skeptic of Tesla’s plans.
At the Berkshire Hathaway Inc. annual meeting this past weekend he said other car companies have tried insurance in the past, only to fail at it. He said the likelihood of success of auto companies getting into the insurance business is about as likely as insurance companies getting into the auto industry.
“I worry much more about Progressive,” Mr. Buffett said of rival insurer Progressive Corp. “It’s not an easy business at all.”
Policy as Described
- You sign on the dotted line that you will not drive crazy.
- Then if there is an accident, Tesla might refuse to pay the claim if the black box says you were driving 1 MPH over the speed limit.
Not About Insurance
This ploy by Musk is not about insurance at all.
Rather it is to keep Tesla in the news. It is a hook by Musk to keep shareholders' hopes up that Tesla will be able to someday sell enough cars to pay off debt without repeated fundraising efforts.
Mike "Mish" Shedlock