2018 Tesla Model S and 2018 Tesla Model X
Over the first quarter of the year, Tesla reported a much higher-than-anticipated loss and revenue below what analysts had been expecting—tangled up in logistical delivery issues in Europe, import issues in Shanghai and Beijing and finally, book-ended by a flurry of deliveries in Europe and China in the last 10 days of the quarter.
As financial experts pored over the financial numbers, Tesla CEO Elon Musk took the discussion toward a different set of numbers—the sort that could be harvested from its vehicles and Autopilot sensors and essentially make the company an insurance provider.
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Musk provided the cursory outline for an insurance program that will launch in about a month and be based on driver behavior, potentially saving Tesla owners money. “It will be much more compelling than anything else out there,” said Musk.
Such a program isn’t a complete surprise. Some analysts had expected an insurance option to be rolled out alongside leasing, which Tesla started offering earlier this month. There have also been some high-profile disputes with insurers—such as in 2017 when AAA raised Model S and Model X premiums by 30 percent due to what it saw as abnormally high claim rates.
Tesla Model 3 dashboard in Autopilot testing with IIHS [CREDIT: IIHS]
Tesla is already giving some more detailed information from its vehicles to insurance companies to help with rates, said Musk. “And obviously as we launch our own insurance product next month we will soon be incorporating that information into the insurance rates,” he said, calling it an “information arbitrage opportunity, in which we have great knowledge of the risk profile of the customers.”
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Such a program might prove useful—even essential—for Tesla’s future feature-complete Full Self-Driving capability, outlined earlier this week, to allow owners to use their vehicles as part of a Tesla ride-hailing service, to generate income, without the owner necessarily present.
“We believe we’ll have the most profitable autonomous taxi on the market,” said Musk today.
Just as establishing a business model for such a thing will be an entirely new proposition, so will be finding insurance. With the company stepping in to insure its drivers with this soon-deployed program for drivers, perhaps when the time comes it will then also be ready to help insure the driverless and see that profitability pencil out.