Tesla Inc TSLA announced Wednesday it's launching an insurance division to offer Tesla owners cheaper coverage for their cars.
What To Know
Tesla Insurance will offer coverage up to 30% less expensive in some cases, but for now, only to drivers of its cars in California. The company said it hopes to offer insurance in other states in the future.
“Because Tesla knows its vehicles best, Tesla Insurance is able to leverage the advanced technology, safety, and serviceability of our cars to provide insurance at a lower cost,” the company said. “This pricing reflects the benefits of Tesla's active safety and advanced driver assistance features that come standard on all new Tesla vehicles.”
Tesla CEO Elon Musk telegraphed the new business back in April when he said in an earnings conference call the company was considering launching its own insurance arm for drivers of its cars.
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Why It's Important
One of the company’s stated goals has been to make electric vehicle driving more financially accessible, and the move into cheaper insurance is seen as one way it may be able to do that.
Industry analysts, however, have said the Tesla insurance product isn’t likely to massively disrupt the insurance sector, at least not soon, and Reinsurance News reported back in April that the move would be done in partnership with an established insurer, Markel Corporation subsidiary State National Insurance Company, Inc., which filed material with California insurance regulators that month.
Analysts with Credit Suisse who heard about the planned insurance move at a presentation recently came away believing “Tesla is more likely to partner with multiple insurance companies rather than seek to become a formidable competitor,” according to Reinsurance News.
Tesla shares traded around $215.34 at time of publication.
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