Tesla announced its plans to make its own ride-sharing app before it accomplishes full autonomy. Per its announcement, the drivers should be covered under the automaker’s own driver insurance.
Tesla is taunting its ride-hailing app for a few years now and the point is that the app should be powered by Tesla’s self-driving system. “Tesla Network”, as its CEO Elon Musk called it, was in his head since the last year when he talked about achieving full autonomy of his vehicles. However, during the company’s Q4 earnings release last week, Musk said there is an option that Tesla Network will be released with human drivers instead of full self-driving.
“I think it will probably make sense to enable car sharing in advance of the kind of robotaxi fleet because the car sharing can be done before Full Self-Driving is approved by regulators. So it’s probably something that we would enable before a sort of robotaxi fleet is enabled.”
Insurance Rates Cheaper Than Competition
Let’s not forget that back in 2019, Tesla began with its in-house insurance and claimed with rates of more than 30% cheaper than its competitors.
The car insurance program first started offering its packages to clients in Australia and Hong Kong. Since then, it spread to several other markets including North America. However, before these packages were offered in cooperation with other insurers. Now, Tesla is going on its own – still, only in California for now.
Tesla CFO Zach Kirkhorn spoke about spreading onto other markets saying:
“Tesla Insurance is currently available in California. A couple of things that we’re working on on this front: The first is to expand it to other locations, and we are preparing the regulatory processes, preparing our processes to go through the regulatory processes in those locations. We’re also working on the processes to continue to adjust our rates in California, which also have to go through regulatory processes as insurance is quite heavily regulated.”
Musk also added that his belief is that Tesla will be able to offer even better discounts based on the use of Autopilot under their own insurance program.
Sense of Security as an Advantage
And Musk is right on way. One thing is sure. All the info about the vehicles in the fleet gives its clients a sense of security and therefore, a qualitative advantage over other insurers.
“I think it would make sense for us to close-loop on higher use of Autopilot, it reduces the insurance costs as well as the probability of injury. So I think insurance is going to be quite a major product of Tesla over time. The amount of money that people spend on car insurance is like a remarkably big percentage of the cost of a car, like you can lease a Model 3 right now for $400 a month, but a typical owner in California will be paying sort of between $100 and $200 a month in insurance.”
For now, a timeline for the expansion of Tesla Insurance outside of California or the release of its Tesla Network ride-sharing app, is still not known.