Tesla has introduced its first-ever insurance discount for Supervised Full Self-Driving (FSD) users in two U.S. states, marking a key step ahead of its planned launch of unsupervised robotaxi services later this year.
According to reports, the initiative, which began on February 1st for new customers and March 8th for existing ones, marks a significant step in Tesla’s push toward autonomous driving and its expanding role in the insurance market.
La Noticia Digital AR – an online news platform based in Argentina, specifically focused on reporting news related to the electric vehicle (EV) industry, said the discounts will be rolled out to more states imminently.
TESLARATI on X also reported the news, saying that Tesla has been testing unsupervised FSD at its Fremont, California factory and plans to begin similar tests at its Gigafactory Texas. But, due to privacy laws, Tesla insurance in California cannot currently utilise real-time driving behaviour data.
The program comes after Tesla CEO Elon Musk said last week that the company is also planning to launch fully autonomous rides in Austin, Texas in June
“So, we’re going to be launching unsupervised Full Self-Driving as a paid service in Austin in June,” Musk said during the Q4 earnings call. “So, I talked to the team. We feel confident in being able to do an initial launch of unsupervised, no one in the car, Full Self-Driving in Austin in June.”
Impact on the marketplace
The increasing development and potential adoption of autonomous vehicles present a long-term challenge to the auto insurance industry, though the precise nature and timeline of the impact are still subject to various factors. While a shift in liability from drivers to manufacturers is a possibility, it is not a certainty.
According to a Financial Times analysis, current market indicators, such as investor confidence reflected in valuation metrics of insurance companies like Progressive, suggest that the industry is not anticipating an immediate or drastic change. Profitability is projected to remain strong for the foreseeable future, even under less optimistic scenarios.
The role of insurers is also likely to evolve rather than disappear entirely. Potential adaptations include partnerships with car manufacturers to offer bundled insurance and maintenance services. Insurers also point to the potential inefficiencies of relying solely on product liability claims for accident compensation, suggesting a continued need for their services in providing timely and efficient claims processing.
Another factor to consider is the possibility of self-driving technology improving safety without reaching full autonomy. A reduction in accident frequency, even if repair costs for automated vehicles are higher, could initially benefit insurers financially until premiums are adjusted to reflect the improved safety record.
The future of auto insurance will depend on a complex interplay of technological advancements, regulatory decisions, and strategic choices made by insurance companies. The industry has time to adapt, but the specific form that adaptation will take remains to be seen.
Tesla’s confidence in technology
The discount underscores Tesla’s confidence in its FSD technology, suggesting that self-driving capabilities contribute to lower risk profiles for drivers. While the promotion is currently limited to Texas and Arizona, the report states that Tesla’s insurance is already available in several other states, including California, Nevada, and Virginia, hinting at potential future expansions.
The move comes as Tesla prepares for the launch of unsupervised robotaxi services later this year, further signaling the company’s ambition to revolutionize not just transportation, but also how auto insurance is priced and structured. By integrating real-time driving data into its insurance model, Tesla is reshaping the traditional approach to risk assessment, potentially pressuring traditional insurers to adapt to evolving autonomous vehicle trends.
With self-driving technology advancing rapidly, Tesla’s latest initiative highlights how automation is influencing not just the future of driving, but also the broader insurance landscape.
UK EV incentives via potential insurance tax breaks
Meanwhile, in the UK, insurers have set forth proposals to the UK Government for the removal of Insurance Premium Tax (IPT) on electric vehicles as an additional incentive, with research showing 36 per cent of motorists would consider switching to electric if the current 12% IPT were removed from their insurance.
GB News reported that The Green Insurer’s research revealed that 64% of motorists believe the Government should provide incentives for purchasing electric vehicles.
Among current petrol and diesel vehicle owners, 31% plan to make their next vehicle purchase an electric or hybrid model.
The report concluded that a “further 34% of drivers indicated they were indifferent to the type of fuel their next car would use, suggesting potential openness to electric vehicles with the right incentives.”
Reporting by Joanna England