Because of the rapid development of linked car services, automakers can now provide a wide range of products and telematics insurance.
Tesla is one of the early adopters in this space, with its Tesla Insurance service set to launch in 12 US states in November 2022. But, in addition to providing drivers with insurance rates that accurately represent their driving habits and reward safe driving behavior, Tesla Insurance serves the company in other ways.
During Tesla’s Q4 2022 and full-year earnings call yesterday, CEO Elon Musk provided insight on how the automaker obtains valuable insurance feedback that helps it minimize vehicle repair costs.
It is also giving us a good feedback loop into minimizing the cost of repair of Teslas – for all Teslas worldwide – because we obviously want to minimize the cost of repairing a Tesla if it’s in a collision… And previously, we didn’t actually have good insight into that because the other insurance companies would cover the cost. And actually, the costs in some cases were unreasonably high
Elon Musk, CEO of Tesla stated on Tesla insurance feedbacks
Tesla insurance collected information
Collected data through Tesla Insurance proved so beneficial to the company that it led to changes in the design and software of its vehicles. Furthermore, Musk explained that the insurance program provided Tesla with valuable insights into how it could optimize its parts and service to reduce repair costs.
Musk said that most Tesla accidents are minor, “like a broken fender or a scratched side of the car,” and that the company is working on ways to get cars repaired quickly and efficiently with help from Tesla Insurance.
It’s remarkable how small changes in the design of the bumper and improving the logistics of spare parts or providing spare parts needed for collision repair have an enormous effect on the repair cost… So, this has actually a very significant effect on the total cost of ownership and customer happiness
Elon Musk, CEO of Tesla stated on Tesla insurance collected information
During the earnings call, investors questioned Tesla CFO Zachary Kirkhorn when the program would become large sufficiently to warrant details in the company’s financial reports. The executive stated that it would likely take some time before it expands to the point where disclosures are required.
