Elon Musk has made a name for himself as a data-savvy innovator, and he’s seeking to further that label with an ambitious goal: scaling up and expanding Tesla’s car insurance product across the US.
Industry analysts say that Tesla might have an advantage in building out its own car insurance company as a result of one of the exact tools that Musk loves: data.
In July, Musk said that Tesla is “creating a major insurance company” that would utilize vehicle data in order to determine insurance rates for drivers on the basis of how aggressively — or safely — they drive on the road.
“Tesla has the car data and driver profile, which it can use to underwrite its insurance product,” Robert Le, an analyst at PitchBook Mobility, told Business Insider. “Telematics is going to be an important driver of enhanced underwriting in this space as all of the major insurers now have Telematics products.”
“We’re building a great — like a major insurance company,” Musk said to investors on an earnings call in July. “Ultimately, where we want to get to with Tesla Insurance is to be able to use the data that’s captured in the car, in the driving profile of the person in the car, to be able to assess correlations and probabilities of crash and be able then to assess a premium on a monthly basis for that customer.”
And Musk isn’t alone on his thoughts regarding the product’s outlook given the fact that car owners are seeking resilient plans that can be trusted.
“We believe Tesla is well positioned to leverage its unique OTA capabilities and fleet-wide interior and exterior camera network to build comprehensive risk models and accurately adjust claims,” Hussain said. “Additionally, we believe Tesla moving into insurance is a proactive move because consumers are increasingly drawn to flexible vehicle ownership models.”
The ongoing wave of company developments has positioned Tesla in a good spot financially.
Recently, Musk sent an email to employees laying out one of his upcoming ambitious goals, which is to build a total of 500,000 vehicles in 2020. Musk envisions that Tesla will increase its fourth quarter production by 17% compared to the third quarter to reach that goal. The US-based electric vehicle company would need to produce 170,000 more cars to satisfy Musk after Tesla beat analyst expectations for third-quarter deliveries.
When Tesla topped Wall Street expectations in the second quarter of this year, that was its fourth consecutive quarter of profit and a company record. A month later, Tesla passed Visa on August 31 to become the seventh-largest US company in terms of market capitalization. This milestone came on Tesla’s inaugural day of post-split-trading.
On Wednesday, ahead of its third-quarter earnings report after the market closes, Tesla is currently the ninth-largest company by market capitalization, according to Bloomberg data.
The company’s earnings call, scheduled for Wednesday afternoon, could reveal more information on Tesla’s ambitions and road map for Tesla Insurance Version 2, as investors and analysts will have the chance to hear directly from Musk himself.
Source: Business Insider
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