Published on August 17th, 2020 |
by Johnna Crider
August 17th, 2020 by Johnna Crider
Elon Musk has talked about a key benefit of Tesla’s insurance, that Tesla is able to give itself insight into the cost of repairing its vehicles. This not only saves Tesla customers money, but it allows Tesla to make necessary changes in order to keep the prices decent and easier to repair.
In the tweet below Whole Mars shared an audio clip of Elon Musk emphasizing the importance of a feedback loop for Tesla Insurance.
One of the benefits of Tesla Insurance is that it’s given Tesla insight into repair costs.
That has allowed them to make changes to processes and even vehicle designs to make them cheaper and easier to repair.
The new rear underbody casting is one example of this. More coming. pic.twitter.com/F8NjKjmGhh
— Whole Mars Catalog (@WholeMarsBlog) August 13, 2020
In the audio clip from the Tesla Q2 2020 earnings call, Elon Musk spoke of the importance of a feedback loop because it shows him and others at Tesla what is driving the insurance costs.
“This was actually very helpful for us to have a feedback loop to see what is driving insurance expense. A lot of it is just — it’s like a little fender bender and the net fender bender, because of the way that the body collision repair is being done, costs like $15,000 or something crazy” he said. “And then we can actually adjust the design of the car and adjust how the repair is done to actually have the fundamental cost of solving that problem be less. So this has helped us under a whole bunch of silly things that we were doing basically, without realizing it. But this is the problem, in general, with insurance. If insurance is, like, all you can eat, then the feedback loop for improvement is weak,” Elon Musk said.
By having its own insurance company, Tesla can, if it deems useful, redesign a part of the vehicle that costs an outrageous amount of money to repair so that it is much cheaper to repair. This also helps Tesla improve its insurance product, and this is a win for both Tesla and its customers. Who doesn’t want to have an insurance company that actually cares about its client’s needs, not just how much money it can squeeze out of the clients?
“And on the insurance front, I want to be clear: We’re building a great — like, a major insurance company. If you’re interested in revolutionary insurance, please join Tesla.” — Elon Musk
Elon Musk also put the insurance industry on notice. By saying that Tesla is building a great, major insurance company, he basically doubled down on Tesla’s goals to reshape and make over an industry that needed it. Critics at first said that Tesla wouldn’t succeed in the insurance industry because there were large, established competitors. As with all of the other industries it has touched, Tesla will make some serious waves and change the way insurance is done — and for the better.
When Will Tesla Insurance Be Widely Available?
In the same call, Tesla’s CFO, Zachary Kirkhorn, noted that Tesla should have insurance rolled out to a handful of states by the end of this year if all goes according to plan with regulatory approvals. Here’s hoping that Louisiana is on that list of states (probably not, due to our ancient and strange laws, but one can hope.)
“And assuming that regulatory approvals go smoothly, we hope to have this in a handful of states by the end of the year. And then we’ll continue to file for approval in additional states. With regulatory approval there, we’ll continue to roll this out nationwide as quickly as we can. And then that product, as we continue to collect more data and reiterate on it, there’ll be version two, version three, etc. as we continue to refine that,” Kirkhorn said in the call.
Another thing that Kirkhorn noted in the call was that Tesla’s insurance, which started in California, has been “well-received.” He also said that it is a fairly standard insurance product with elements that are unique to Tesla. “So you can think of it as a version one of Tesla Insurance.”
It’s exciting to watch Tesla Insurance grow from an idea into something that is openly embraced by customers. For more resources on Tesla’s insurance, be sure to check out our dedicated Tesla Insurance page and also take a look at Tesla Insurance 101.
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