Tesla to release insurance product next month because others don’t understand tech

Today Tesla had their quarterly earnings call and announced the company lost around US$700 million in Q1 of 2019. There’s a number of reasons for this, including the international...

Today Tesla had their quarterly earnings call and announced the company lost around US$700 million in Q1 of 2019. There’s a number of reasons for this, including the international distribution challenges of entering the European market, as well as delivery issues in China.

While losses are never good, the cost of rapidly developing the vehicle product offerings, as well as expanding globally, doesn’t come cheap and doesn’t always go smoothly. Ultimately this loss is not a systemic one.

The earnings call featured Elon Musk (CEO), Zach Kirkhorn (CFO) and JB Straubel (CTO). Ahead of the earnings call, Tesla tweeted out a link to question platform say.com for retail shareholders to ask the company execs. While not all questions left there were answered, a number were and one interesting response is worth talking about.

The question from Michael S, asks Tesla about the issue of getting insurance, particularly in light of the fact Tesla are pushing hard to full autonomy, making the vehicle much safer, something most legacy insurance agencies can’t or don’t currently accommodate for.

Elon responded on the earnings call by saying ,

The answer is yes, we are creating a Tesla insurance product and we hope to launch that in about a month. It will be much more compelling than anything else out there.

Elon Musk, Tesla CEO

That timeline is particularly interesting for Australians who are ready to configure and own their first Tesla, when sales start of RHD Model 3s in the second half of this year.

While more compelling could mean lots of things, its likely that means the insurance would be offered at a price point that is significantly lower than other auto makers. If Tesla is confident that their technology stack allows vehicles to avoid potential accidents, thanks to its understand of the 360 degrees around it, then the likelyhood of an accident is significantly lower, meaning payouts for damages would be lower and therefore cheaper for the customer each month.

During the investor’s autopilot even this week, Musk also responded to a question around liability in the event of an accident when the car was in FSD Autopilot mode. His response suggested that Tesla probably would be responsible. That response is likely to get confirmed by legal closer to the launch of level 4/5 autonomous driving, but if true, resting that liability on Tesla’s shoulders, should reduce the premiums for Tesla owners.

Musk confirmed that many Tesla owners are stretching their budgets to figures they never would imagined paying for a car, but such is the want for the product on offer, that many customers do pay up. With that financial stretch occuring for the purchase, any reduction in insurance costs would definitely be appreciated.

Let’s hope the insurance product is a global one at launch and if you’re in the vehicle insurance industry, your market is about to be disrupted.

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Creator of techAU, Jason has spent the dozen+ years covering technology in Australia and around the world. Bringing a background in multimedia and passion for technology to the job, Cartwright delivers detailed product reviews, event coverage and industry news on a daily basis.
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