Connect with us

Hi, what are you looking for?

CleanTechnica
Tesla Insurance

Cars

Tesla Insurance Could Be 30–40% Of The Value Of Tesla’s Car Business

In Tesla’s Q3 earnings call the other day, Elon Musk touched upon some of the most valuable business units within Tesla. One of those was Tesla Insurance. He said, “Obviously, insurance is substantial. So insurance could very well be, I don’t know, 30%, 40% of the value of the car business, frankly.”

In Tesla’s Q3 earnings call the other day, Elon Musk touched upon some of the most valuable business units within Tesla. One of those was Tesla Insurance. He said, “Obviously, insurance is substantial. So insurance could very well be, I don’t know, 30%, 40% of the value of the car business, frankly.”

Tesla Insurance

With Tesla being the most valuable carmaker in the industry, this means that its insurance business will be pretty valuable. Value Penguin has a top 10 list of the most valuable auto insurance companies today. State Farm takes the #1 spot, with $42 billion and 17% market share. State Farm is followed by Geico ($33.1 billion) and Progressive ($27.1 billion).

How Much Is 30%?

Right now, Tesla’s insurance is only available in California, but eventually, it will roll out to other states. Back in July, Tesla’s value exceeded almost every company in the S&P 500. Tesla’s market cap is currently $391.95 billion. If Tesla Insurance was 30% of Tesla’s market cap today, that would be $117.6 billion. This would knock State Farm from its #1 spot (remember that its market cap is $42 billion).

Feedback Loop

Elon Musk explained some of Tesla’s opportunity in this arena on the conference call. “And as we’ve talked about before, with a much better feedback loop, instead of being statistical, it can be specific. And obviously, somebody does not have to choose our insurance. But I think a lot of people will. It’s going to cost less and be better, so why wouldn’t you?” The feedback loop is a key benefit of Tesla’s insurance. Tesla will be able to better examine the cost of repairing its vehicles. In the long run, this will save Tesla customers money while allowing Tesla to make any changes that it needs to make in order to bring the costs of common repairs down, or reduce the likelihood they’ll be needed.

Elon Musk also spoke about this during Tesla’s Q2 2020 earnings call. “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,” he said.

Lower Prices

As for lower prices, Tesla’s Insurance has already cut the costs that several owners have been paying. Back in August, James Locke shared his story with me of how he recently switched from State Farm to Tesla for both of his family vehicles. With State Farm, he was paying $551.21 monthly for both vehicles. With Tesla, that number dropped to $193.25, which is a savings of 64.9% each month.

One way Tesla can improve its insurance, according to Locke, is with more flexible software for those who move around the country and between countries. “I was actually quite surprised how difficult it appears to be to move our Canadian accounts to the US and allow us to see and access the same features on the webpage as other Californians,” he said. He also noted that Tesla’s phone support was fast and had minimal hold times.

In Tesla’s Q3 call yesterday, Elon Musk also used insurance as an example of a product made by Tesla’s internal applications team. “Something like insurance is a good example of a product that’s basically made by our internal applications team. So, we made the insurance product and connect it to the car, look at the data, calculate the risk. This is all internally — basically internal software application.”


Appreciate CleanTechnica’s originality? Consider becoming a CleanTechnica Member, Supporter, Technician, or Ambassador — or a patron on Patreon.

 
 
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Written By

Johnna Crider is a Louisiana native who likes crawfish, gems, minerals, EVs, and advocates for sustainability. Johnna is also the host of GettingStoned.online, a jewelry artisan and a $TSLA shareholder.

Comments

#1 most loved electric vehicle, solar energy, and battery news & analysis site in the world.

 

Support our work today!

Advertisement

Power CleanTechnica: $3/Month

Tesla News Solar News EV News Data Reports

Advertisement

EV Sales Charts, Graphs, & Stats

Advertisement

Our Electric Car Driver Report

30 Electric Car Benefits

Tesla Model 3 Video

Renewable Energy 101 In Depth

solar power facts

Tesla News

EV Reviews

Home Efficiency

You May Also Like

Cars

The EV Freedom Bill in Connecticut that so many were hoping would pass didn’t. Auto dealerships lobbied hard to fight this bill — and...

Batteries

Last month, Tesla released its Conflict Mineral Report for the fiscal year ending on December 31, 2019, and emphasized the importance of sourcing only...

Cars

Oh, this would be fun and exciting to watch if this happened. Ford’s CEO, Jim Farley, agreed that having a drag race with Tesla...

Cars

Coal Miners Driving Teslas may seem like an oxymoron at first, but in the case of this particular YouTube channel, it’s actually something pretty...

Copyright © 2021 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.