Risk Management » Tesla Insurance Lowering Costs For Insured

Tesla Insurance Lowering Costs For Insured


February 2, 2023

Repair cost is a major disincentive to the purchase of electric vehicles, a fact that motivated Elon Musk to start an insurance business, promising to lower rates by 30 percent. The synergy between the two businesses was featured in Musk’s fourth-quarter earnings call. He says the data gathered from the insurer is helping the automobile company make small design changes and improve the logistics of spare parts to reduce repair costs. According to Musk, Tesla Insurance’s competitive rates have forced other insurance companies to lower their rates as well. He said that Tesla automotive didn’t have much insight into the cost of repairs before he started the insurance company because third-party insurers covered his customers, but in certain cases, the rates were unreasonably high. He noted that many drivers are forced to pay a significant proportion of the lease payment for their vehicle over again in insurance premiums, and said that the problem lay in what he views as the unnecessary number of entities involved in the insurance process. In May, speaking at a reinsurance summit, Musk called the car insurance industry “incredibly inefficient because you’ve got so many middle entities, from an insurance agent all the way to the final reinsurer, there’s like a half a dozen companies each taking a cut.”

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