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TESLA upset Warren Buffett by suggesting that they will offer Car insurance.

Welcome again to another post.

Tesla has upset Warren Buffet with the idea that they are considering setting up Car Insurance for all of their products Model S, X, 3 and Y.

The terse rebuke shows that yet another industry can suddenly see that Musk has them in his targets.

With the common complaint that the insurance cost to cover a Tesla is more expensive often being reported. Although when you compare Apples to Pears then what do you expect? A Ford Mondeo at £23k against Model 3 performance model £47k. Yes, one would think the insurance would be more. 0-60 of the Ford Mondeo is sub 9 seconds against Model 3 getting there in under 3.2 seconds. Yep, there will be a difference! Both on the cost of the car and its ability to get to 60 quicker. Quicker equals more expensive insurance or the correct premium. Even the slow Model 3 gets there in 5.3 seconds. Not slow!

However, Musk has smelt an opportunity for Tesla to insure the whole fleet under the Tesla banner.

Insurance companies work on the driver’s experience and ability of he or she has shown not to hit other cars and the actual cost of repairing/replacing the car if it all goes very wrong.

Tesla has odd 500,000 plus cars that are increasing by 5,000 a month that it knows exactly what is happening in each. As they are used for gathering data for the self-drive feature when that is possible in the future.

Insurance companies themselves would fall over themselves to have this data on each of us. Hence, the small black boxes that are being installed in newly qualified drivers in the UK to drag down their £3,000-9,000 premiums to something that the recently pass driver can afford.

Tesla knows the cost of repair and can make this at cost plus a small margin. They also know the true cost of a new car. So, they are already in a strong position as a 20% markup is not unexpected in the future. They can then roll out the Taxi element without the cost to the individual owner as the cost will be shared over the complete fleet. They can salvage un-broken parts from the fleet and service the damage vechiles.

The other benefit is the constant revenue stream coming into Tesla rather than the insurance companies. You sort of wonder why other car manufactures did do this in the I.C.E. or another case of the Desiel Gate cartel? Either way, I can’t really see many downsides to this. The repair network is still there for ICE cars. So, all they need to do is provide the parts next day and I can guess who would be up for that business. Starts with “A” and in jungle in nature.

No messy Taxi insurance needed when being used by the Tesla Click and Collect the customer service. Just in case Warren Buffett was only concerned about Tesla they should be. As Amazon has also made noises on this car insurance option as well. It’s only an extension to their popular PRIME offering. It’s a Trillion Dollar industry that is ripe for the picking. It will have the effect of Amazon on keeping pricing down. What’s not to like?

Until next time.

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