Another Elon Musk Desperate Ploy: Sell Car Insurance to Tesla Owners

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Elon Musk floated another idea yesterday in a desperate attempt to convince shareholders Tesla has a future.

In the wake of needed fundraising and numerous spontaneous combustion issues Tesla Plans to Sell Owners Cheaper Car Insurance.

Tesla Inc. is creating its own branded insurance program, a move the electric-car maker believes will enable it to offer a lower-cost product to drivers.

Tesla Chief Executive Elon Musk has been working with a unit of Virginia-based Markel Corp. and another company, which hasn’t been named, to offer the branded insurance, according to Markel and regulatory insurance filings in California, where Tesla is based.

Mr. Musk said buyers would have “to agree to not drive the car in a crazy way.” If they do, their insurance rates would be higher, he said. He said he hoped to launch the insurance offering within a month.

A 2019 report from QuinStreet Inc. unit Insure.com—a consumer insurance information website—ranked the Tesla Model S as the 15th most expensive car to insure in the country, with an average annual insurance paid of $3,300. The Nissan GT-R was the most expensive at $3,941. Numerous BMW and Mercedes models ranked ahead of the Tesla vehicle.

Count Warren Buffett—owner of auto insurer Geico—as a skeptic of Tesla’s plans.

At the Berkshire Hathaway Inc. annual meeting this past weekend he said other car companies have tried insurance in the past, only to fail at it. He said the likelihood of success of auto companies getting into the insurance business is about as likely as insurance companies getting into the auto industry.

“I worry much more about Progressive,” Mr. Buffett said of rival insurer Progressive Corp. “It’s not an easy business at all.”

Policy as Described

  • You sign on the dotted line that you will not drive crazy.
  • Then if there is an accident, Tesla might refuse to pay the claim if the black box says you were driving 1 MPH over the speed limit.

Not About Insurance

This ploy by Musk is not about insurance at all.

Rather it is to keep Tesla in the news. It is a hook by Musk to keep shareholders' hopes up that Tesla will be able to someday sell enough cars to pay off debt without repeated fundraising efforts.

Mike "Mish" Shedlock

Comments (30)
No. 1-11
Carl_R
Carl_R

Isn't the reason people buy Teslas so they can "drive crazy"?

2banana
2banana

Does the insurance cover a Tesla bursting into flames while parked and "found on the side of the road dead" when it gets cold?

Wagner12
Wagner12

Then if there is an accident, Tesla might refuse to pay the claim if the black box says you were driving 1 MPH over the speed limit.

Isn't this libertarian wet dream that those who take more risk are paying more?

Runner Dan
Runner Dan

“I worry much more about Progressive,” Mr. Buffett said of rival insurer Progressive Corp. “It’s not an easy business at all.”

LOL! Compared to what? Building rockets?

Here's what's easy: Have a company that rates sliced and diced bundles of garbage MBS's which all must be rated per law, give all the garbage bonds AAA ratings, and then suffer no consequences after the catastrophe. In fact, profit from it!

BoneIdle
BoneIdle

To be fair here Mish. In my country Mercedes Benz not only sell you insurance but also finance the cars. I took up this option when I bought a couple of M.B.'s. The leasing interest was less than "mainstream" finance companies. The advantage of MB insurance is that in the event of a crash, they insisted that the cars be repaired at their own warranted repair shops and use OEM parts. At end of lease MB would take the car back and sell it as a "MB guaranteed car". If repaired at a non MB shop - then not sold as a "MB guaranteed car".

Lexus were financing there own cars at near 0% interest rates - plus offering insurance. BMW also does this.