On Tesla’s Q2 2020 earnings call, among many other things, Elon Musk gave updates on Tesla Insurance. Tesla Insurance was formulated as an answer to the high cost of insurance for electric vehicles in some places, and inadequate accounting for Tesla vehicles’ superior safety.
Another part of Elon Musk’s thinking around this idea was: no one knows Tesla vehicles as well as Tesla, so who better to create insurance for Tesla vehicles? Tesla Insurance was launched in 2019 as a response to owner complaints about high insurance premiums. So far, it’s only available in California, but that may soon change.
Tesla Insurance Updates from the Earnings Call
One thing we learned from the call is that Tesla Insurance is at version 0.9, and they are working on its first version of telematics. Another thing is that coverage will be provided to all vehicles that become part of the Tesla ridesharing network. There’s a lot to unpack in these two simple sentences.
Tesla Insurance coverage will be provided to all vehicles using the Tesla ride sharing network
— Whole Mars Catalog (@WholeMarsBlog) July 22, 2020
Telematics
In the insurance industry, telematics is used to collect data about your driving habits. It could also come into play if your provider offers usage-based insurance policies (pay-per-mile, for example). One way to capture telematics data is through a mobile app. Another way is through a small device — such as a black box that you can plug into your vehicle’s onboard diagnostic port. This is usually located under your dashboard in regular gasoline cars.
Tesla is developing its own telematics, and it could be either a device or a separate app. Knowing Tesla and it’s an approach to ease of driving and minimal design, my money is on an app instead of a device that you plug in somewhere.
Tesla Ridesharing Network
This is a reference to the precursor to robotaxis, which Tesla plans to launch in 2020 as a part of its vision for autonomous ride-hailing service.
In this ride-hailing network, Tesla will allow owners to add their vehicles to the company’s own ride-sharing app, which will have a similar business model to Uber’s. The difference eventually is that the vehicle does the work, without a human driver. Tesla will take a cut of revenue from those rides, as will the owner of the vehicle.
Regarding the insurance update, coverage will be provided to all drivers/vehicles using the ride-hailing network.
Putting The Insurance Industry On Notice
“We’re building a great, major insurance company. If you’re interested in building a revolutionary insurance company, please join Tesla. Especially if you want to change things. This is the place to be. We want revolutionary actuaries.” —Elon Musk, Q2 2020 Earnings Call
When Elon Musk said that Tesla is building a great, major insurance company, he literally put the insurance industry on notice. Tesla’s going to do to insurance what it did for the auto industry and the energy industry, which, Elon noted, is larger than the auto industry.
“The energy sector is bigger than the automotive sector” — @elonmusk
— Whole Mars Catalog (@WholeMarsBlog) July 22, 2020
Tesla Owners Already Enjoy Benefits Of Tesla’s Insurance
One thing that Tesla has done with creating its insurance program is open up another stream of revenue. However, that is not all Tesla and Elon Musk have done with this. “They are also helping to fundamentally change the way that we interact with insurance providers. In the future, insurers will be more like a partner on our journey both by car and on foot — both on Earth and beyond.” —Fast Company
One of the major benefits Tesla owners with Tesla Insurance have is that they have a more seamless and convenient type of insurance. It often has a lower-priced premium, and in the long run, it will be driven by real-time data. Thanks to Tesla’s Autopilot and FSD, the cars can drive more safely than the average human driver (“Humanpilot,” as some have been calling it). Also, Tesla knows how you drive better than you do. It doesn’t need to get some of the data the insurance industry needs to create an insurance product fully tailored to the individual needs of its customers. It already has that.
Another benefit is the lower premium notices. Already, Tesla customers have been receiving notices that they are getting lower premiums upon renewal. This is unusual if not unheard of and is one of the main reasons that, as with the auto industry, insurance providers are going to have to evolve or die.
Tesla has put the insurance industry on notice that it is next for its makeover, and those who stand to benefit are insurance customers (and Tesla).
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