Hot topics | Coronavirus pandemic

Elon Musk Announced The Launch Of Tesla's Own Insurance Company

Elon Musk Announced The Launch Of Tesla's Own Insurance Company

Tesla Insurance will start operating in some States later this year. The company will sell insurance for Tesla cars, calculating for each driver the personal cost of the service, based on the data transmitted to the company by their car — from mileage, frequency, and time of trips to driving style. Elon Musk is confident that the new business will become a new source of revenue for Tesla. Potentially, the service will immediately receive hundreds of thousands of customers-owners of Tesla cars in the United States.

For years, drivers have complained about high rates of Tesla's electric car insurance, mostly because of the higher cost of repairing cars. The company first started talking about its own auto insurance service in April last year, and a few months later tried to launch the service in California.

However, after a few hours, the site was disabled due to" algorithm updates", and the cost of insurance for those who managed to get a payment for their cars was not always lower than for third-party companies, as promised by the head of Tesla. As a result, Musk admitted that the experiment was not fully thought out and calls it "version 0.9."

Now owners of Tesla electric cars are promised a full-fledged version of auto insurance, BI reports.

"We are creating something big — something like a major insurance company," Musk told investors at a recent meeting, where he delighted them with a fourth consecutive profitable quarter, the most successful in the company's history.

"Ultimately, we want to come to a point where Tesla Insurance can use the data collected by the car in the driver's profile to understand correlations and accident probabilities and estimate the monthly insurance premium for that customer," he explained.

It is obvious that the company knows about the owners of their cars all that can be learned by filling the car with various sensors. And based on this data, collected around the clock from the first day of operation of the machine, it can accurately predict the probability of any problems — from accidents to battery drowning and mechanical damage. No insurance company in the world today has anything like this in its assets and will never appear because their business was based on other principles of assessing and calculating insurance premiums.

Musk's new initiative will lead to a revolutionary change in the auto insurance market — as the fleet of connected cars expands, their insurance will become the business of automakers, not third-party insurance companies. Those who have data about the actual parameters of machine operation will earn money from them.

Musk has already invited actuaries to work for the company and said that the first insurance plans would become available in some States, most likely at the end of the year.

Besides, he stated the need to develop a cheaper version of the electric car.

"It's important to make the car affordable," he told investors. — I don't think we'll succeed in our mission if we don't make the machines available; this is what worries me most about our development — that our cars are not affordable enough. We have to fix this."

No specific promises, however, Musk did not give, only mentioned that the budget electric car can be compact.

So far, there have been no leaks about Tesla's development of a new even more budget-friendly model than Model 3. This task may be largely achieved with the new type of battery, which Musk intends to present in September. In any case, Musk does not have the resources to launch the production of another Tesla model right now. The company is building a new Gigafactory in Berlin, starting construction of a Gigafactory in Austin, completing a factory in Shanghai, preparing to launch industrial lines for the production of Semi-trucks, Cybertruck pickups, and its batteries. So if new models will appear, it will be in about a year, when the current tasks will be generally solved.