On Tuesday, during Tesla’s annual shareholder meeting, CEO Elon Musk said an insurance offering that he expected his car company to launch in May this year is actually still in the works.
Musk said, “We’re pretty close to being able to release that. We have a small acquisition that we need to complete and a bit of software to write.”
Back in April, Musk said on an earnings conference call that Tesla would be launching its own insurance product in about a month. He said that Tesla has an advantage in insurance, because it has “direct knowledge” of a person’s risk profile “based on the car,” which gives Tesla an “information arbitrage opportunity.”
In 2017, Automotive News reported that Tesla clashed with auto-insurance providers AAA The Autoclub Group when they raised premiums for Tesla drivers, based on research by the Highway Loss Data Institute and others. They had said the Model S and Model X had high claim frequencies and high costs of insurance claims.
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The idea behind Tesla offering its own insurance would be to lower rates for drivers, leveraging internal data from Tesla’s AutoPilot systems to justify that.
Berkshire Hathaway’s Warren Buffet predicted that Tesla will struggle if it goes into the insurance business. “I’d bet against any company in the auto business” getting into insurance, he said. “I worry much more about Progressive.” About one third of Berkshire Hathaway’s business is in the insurance space and that includes Geico.
Date: June 12, 2019