In an exclusive report published last summer, we revealed that Tesla started offering custom car insurance to its customers in Australia and Hong Kong. At the time, the company didn’t want to comment on the new venture, but that changed yesterday during the earnings conference call.
CEO Elon Musk and President Jon McNeill confirmed that they plan to expand the program and have it match the progress of the Autopilot, which should reduce insurance rates to match its lower accident rate.
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When referencing Musk’s recent claim that Tesla’s second generation Autopilot could reduce the crash rate by 90% following the revelation that Tesla’s first generation Autopilot reduced the crash rate by about 40%, analyst Adam Jonas asked:
“if your cars prove to be as much as 90% safer than other cars on a per mile basis, as I think you’ve alluded as a reasonable target in the near-term, and if insurance companies only offer your customers, say, a piddling 5% discount versus a comparably priced car, would you consider offering a service or product like PNC Insurance directly to Tesla owners from your own platform and you own stores?”
Someone missed our report from last year. Jon McNeill, President of Sales and Services, responded:
“We’re actually currently doing that. We’ve been doing it quietly, but in Asia in particular where we started this the majority of Tesla cars are now sold with an insurance product that is customized to Tesla that takes into account – not only the Autopilot safety features – but also the maintenance costs of the car. It’s our vision in the future that we will be able to offer a single price for the car, maintenance, and insurance in a really compelling offering for the consumer – and we’re currently doing that today.”
The fact that they want to package everything into a single offering is an interesting new information.
Here’s the brochure for Tesla’s plan that we obtained for our report last year:
Musk added that while Tesla was venturing in the insurance business, it’s doing it in partnership with established insurers and he thinks that their rate will follow the falling rate of accidents:
“Not to the exclusion of insurance providers but if we find that insurance providers are not matching the insurance proportionate to the risk of the car, then if we need to, we will in-source it. I think we will find that insurance providers do adjust the insurance cost proportionate to the risk of a Tesla.”
In Hong Kong, Tesla is partnering with AXA General Insurance for its new program called InsureMyTesla and in Australia, the automaker released its new plan with QBE Insurance.
It’s reportedly already lowering the cost. In Australia, some owners have reported being offered plans starting at $1,200 AUD per year (~$900 USD). That was pre-second generation Autopilot. It will be interesting to see how it evolves with the system.