Tesla always comes up with disruptive businesses as it now enters the car insurance industry with attractive premiums.
Tesla Inc has entered the car insurance industry threatening to disrupt the market significantly. The largest EV maker in the world has been selling electric cars left and right. In fact, it sold over 1.2 million EVs in 2022. On top of that, it announced numerous price cuts since the beginning of this year to fend off the competition. Moreover, it is now planning to expand to a wider range of countries keeping the future in mind. Amidst all this, Elon Musk had the business sense to cash in on a humungous opportunity in the car insurance sector.
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Tesla Car Insurance
Many of you would be surprised to know that Tesla already offers car insurance service in California, Arizona, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah and Virginia. The plans to roll out this business in other states are underway. There are numerous differences in the way Tesla sells insurance compared to the legacy companies in this sector including Allstate, Geico, StateFarm and Progressive. Tesla will deploy the data that it collects from its EV users and devise customisable plans for its users.
In fact, the safer you drive, the lower will be your premium. To determine that, it will award a safety score to the Tesla drivers depending on various factors and driving mannerisms. On top of that, Tesla is a carmaker that has all the expertise regarding the cars they build including the body, components, software and everything in between. Hence, they are able to assess the repair costs instantly saving the customers a lot of time by preventing waiting for the claim settlement process. Moreover, since everything is in-house, the repair costs will be lower.
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30% Lower Premium
In this way, they are already offering premiums on their EVs that are around 30% lower than what the traditional insurance companies are offering. Moreover, by gathering the data from the users and their way of driving, they will incorporate this knowledge into designing their EVs in a much safer manner. The aim is to make driving much safer and not have accidents in the first place. All these factors combined look like the insurance sector is likely to be disrupted by Tesla as it believes that this vertical could contribute around 30% of total revenue in times to come.
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