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
This article is just… Farcical 😀
If you’re putting stuff like this out there I’m afraid you simply are not listening.
If you still have any doubt after listening to and truly understanding what was put forth at the autonomy day conference, I believe your opinions must be coming from an ideological stance, rather than one based on technical facts. Or maybe you haven’t actually watched it yet.
Does engaging in sexual acts while on autopilot count as “driving crazy”?
I saw this on Pornhub already bro
This is similar to Amazon trying to become a pharmacy. There are so many regulations that vary from state to state that makes reality way more complicated than theory. You can’t sell insurance that doesn’t pay in the event of crazy driving. No state will allow that. The whole point of requiring insurance is if you drive crazy and hurt someone, that someone will have recourse to sue you and actually collect something.
Very expensive insurance is another obstacle preventing adoption of electric cars. I asked my insurance agent once about the premium for insuring an electric car and she said “It’s very expensive. Repair costs after an accident are very expensive.” If Musk could close that price gap by selling cheap insurance to safe driving Tesla owners based on proprietary data Tesla collects from their cars, then he might be on to something. However, other insurance companies already have their proprietary programs that give safe drivers discounts in exchange for letting them collect data: Safeco’s RightTrack, Progressive’s Snapshot, etc. I doubt Musk can outcompete them.
Let’s see. Why not electric cars? The list is getting longer. Let me count the ways:
I have a hypothesis. Perhaps electric cars are being pushed mainstream because the big oil guys have an ugly secret. Maybe we really have hit peak oil this time. As fracking taps out, alternative transportation will be needed even if it is more expensive and worse for the environment. Anyone second that possibility?
Maybe, but there are higher limitations on electric car acceptance. With current battery technology, we can’t have more than 5% of all cars electric. There isn’t enough rare earth metals and cobalt. Adoption beyond this will require a new battery technology that uses more abundant materials.
I agree with Mish that this announcement is mostly free advertising for Tesla.
That said, auto-drive car manufacturers will probably integrate auto insurance with their businesses in the same way that auto manufacturers integrated financing with their businesses.
Geico is one the worse in the industry they need competition at the bottom.
I have Geico. Never had a problem, but then again, I’ve never filed a claim. Way cheaper than State Farm for the same level of coverage.
To be fair here Mish.
In my country Mercedes Benz not only sell you insurance but also finance the cars.
I took up this option when I bought a couple of M.B.’s. The leasing interest was less than “mainstream” finance companies. The advantage of MB insurance is that in the event of a crash, they insisted that the cars be repaired at their own warranted repair shops and use OEM parts.
At end of lease MB would take the car back and sell it as a “MB guaranteed car”. If repaired at a non MB shop – then not sold as a “MB guaranteed car”.
Lexus were financing there own cars at near 0% interest rates – plus offering insurance.
BMW also does this.
Having said that.
I’m no fan of Tesla or any mainstream electric vehicle.
I’m a retired Electrical engineer with 50 years experience working on DC power systems and large battery installs.
There is nothing new in battery technology. – Just incremental innovation. They are playing with the physics – that’s why there are so many battery fires.
If there have been only minor, incremental improvements in battery tech over the last 50 years, then can you explain how I can get in my Tesla Model 3 from San Francisco to Las Vegas
just as fast as with my previous gasoline car? Was this possible 50 years ago with an electric vehicle?
Here are numbers:
Anyone claiming that EV revolution is not here is out of his mind.
Around 30 years ago, when the internet first went from niche to mainstream, the only way most people had to connect, was via dial up modem.
Prior to that, phone calls were on average a few minutes long, and followed a fairly predictable distribution around those few minutes. That’s what telco infrastructure was dimensioned for. And it worked so well, most people weren’t even aware that there wasn’t enough copper in the ground for every phone in the world to be simultaneously taking to some other phone somewhere.
With dial up modems, suddenly you had an exploding class of calls averaging 40 minutes….. What do you then think happened then, to long taken for granted telco service levels?
Filling up at a gas station takes a minute or two for 500 miles. Short enough that people stand there and wait, rather than go to eat. And you’re saying charging takes 40 minutes. Plus whatever time it takes to finish your meal and pay, after you get a message your car is sufficiently charged….. Have you ever bothered trying to extrapolate how many cars will be simultaneously occupying charging points, if the entire bumper-to-bumper caravan between California and Vegas were to require 40 minutes to perhaps an hour charging halfway?
Things are fine as long as it’s just you, Musk and a couple of other true believers making the occasional trip, whether to prove it can be done or for other reasons. But trying to scale it up to “everyone,” requires so much infrastructure as to be almost laughable.
And that’s not even considering the utter inefficiency of yoyoing multiples of the world’s annual lithium production back and forth between Cali and Vegas every weekend…..
For all the use cases where charging a moderate sized battery at home over night, or at work during a workday, is all that is required, BEVs make all the sense in the world. But for longer trips than that, you simply need either much longer ranges per charge, kind of like a nuclear fuel rod; or you need much quicker charging. Neither of which is perhaps even physically possible, much less currently viable, with rechargeable battery chemistries. And to add insult to injury, the latter is utterly trivial, with an existing, well understood, infrastructure that is already built and paid for…..
The main problem ~30 years ago was not that there was not enough copper in the ground. The problem was Circuit Switching protocols that many old farts in Telco industry had developed blind love for. The solution was Packet Switching protocols that actually could use the already existing copper infrastructure more efficiently.
Getting back to point – are you concerned about over stressing electric grid if most people would suddenly switch from gasoline to electric? Then fear no more, because:
Just like with circuit switched networks copper was actually idling most of the time by someone hogging the line … the copper for power transmissions is sitting idle again. Especially at night. Many old farts don’t get this.
politicians who really care about their residents will support local utilities and power plants instead of supporting foreign countries importing oil to us. You know so that money remains in state instead of going to Middle East. Many old fart politicians still don’t get this either.
Here is a good video that captures the #2 point:
Not electric grids per se, although that’s a whole ‘nother can of worms with no realistic “solutions.”
Just imagine everyone who stopped at a gas pump hogged it for an hour. We’d almost all be living upstairs from a gas station, to make that work.
According to your thought process I am ALREADY working and living upstairs from an “EV gas station” a.k.a. known as 6KW electric outlet. Almost everyone has one at home. And many have one at work too.
And the Tesla Supercharger density does not have to be even close to gasoline station density, because after driving Tesla for 1 year I have come to conclusion that annually I spend less time at Tesla Superchargers than at gasoline stations when I owned ICE car. This is because most charging for me happens at work, home or hotel.
I will repeat, buying Tesla is the most:
I am waiting for citizens to wake up from constant mainstream media attacks on Tesla. I guess it will happen once legacy car manufacturers and oil companies will run out of money. The public opinion will change quickly once that happens.
For shorter trips originating and ending at home, and not needing charging in between, BEVs are fine. But building enough charging points in the middle of the desert to let half of California simultaneously spend an hour at one on their Friday and Sunday jaunts forth and back to/from Vegas, simply doesn’t make any sense at all.
Does hauling vast amounts of gasoline to desert makes more sense?
Wagner12 with the very clear logical victory here.
“I worry much more about Progressive,” Mr. Buffett said of rival insurer Progressive Corp. “It’s not an easy business at all.”
LOL! Compared to what? Building rockets?
Here’s what’s easy: Have a company that rates sliced and diced bundles of garbage MBS’s which all must be rated per law, give all the garbage bonds AAA ratings, and then suffer no consequences after the catastrophe. In fact, profit from it!
Isn’t this libertarian wet dream that those who take more risk are paying more?
It is. And is a perfectly valid insurance to sell to people. But fat chance the ambulance chasers who run this dump will allow for anything that sensible.
You mean there are evil lawyers who would sue Tesla in an attempt to take it out of business. But the same lawyers would not do the same to other insurance companies?
I’m sure they’ll sue Tesla as well.
But the specific problem with auto so called “insurance,” is that it is not bought of free will. But rather mandated, for no other reason than to ensure that ambulance chasers have guaranteed deeper pockets to chase.
Does the insurance cover a Tesla bursting into flames while parked and “found on the side of the road dead” when it gets cold?
Isn’t the reason people buy Teslas so they can “drive crazy”?
Ask any Tesla driver what they like about their car and they’ll tell you how fast it is. Apparently they are all in a real big hurry to get somewhere.
How many Tesla drivers have you asked that?
“Apparently they are all in a real big hurry to get somewhere.”
Heaven?
The car literally has an “insane” mode