Tesla, the carmaker, has started selling insurance!
According to foreign media reports on October 16, Tesla is currently cooperating with U.S. insurer Liberty Mutual to offer a specific auto insurance plan for its American electric vehicles, called "Insure My Tesla." It includes replacing the car with a new Tesla for owners who suffer a total loss in the first year.
This move by Tesla amounts to granting an insurance company a business "privilege" that allows whole-vehicle claim settlement. Musk has also envisioned that Tesla owners could pay their auto insurance premiums in one lump sum as part of the purchase price, rather than paying an insurance company year by year.
When automakers begin seizing the initiative in the auto insurance business, what impact will it have on the traditional insurance industry?
Starting October 13, Tesla's insurance plan for U.S. users has been launched.
The main contents include:
First, new-car replacement. If a total loss is determined in the first year, replacement with a new car is allowed;
Second, the auto insurance rate is guaranteed for one year;
Third, genuine replacement parts are provided;
Fourth, 24-hour roadside assistance service is provided in the event of a claim;
Fifth, the cost of renting another vehicle for transportation while the Tesla is being repaired can be covered;
Sixth, valet parking service fees incurred when returning the rental car during the vehicle repair period can be covered.
It is reported that the most attractive feature—the "new car replacement if a total loss occurs in the first year" plan—is expected to roll out in more than 50 U.S. states. However, Tesla's own sales staff are currently not authorized to sell this insurance plan; only licensed insurance agents can do so.
In fact, Tesla began launching auto insurance service plans last year, mainly covering insurance claims for accidents arising from electric vehicles and the application of autonomous driving technology. Last year, Tesla opened the new insurance plan to customers in Australia and Hong Kong, China; at present, this plan is being expanded to North American countries.
Since the beginning of this year, Tesla CEO Elon Musk has personally driven this plan aimed at completely transforming the traditional insurance industry.
Under Musk's original vision, after paying a relatively expensive one-time premium, Tesla owners would enjoy insurance and maintenance coverage for the entire life cycle of the car.
This insurance cost would be included in the purchase price of the Tesla, and Tesla would work to improve the car's driving safety performance to reduce these costs.
Regarding how Tesla's latest insurance plan will actually operate, Jon McNeill, the company's director of sales and service, said that once Tesla finds a partner, it will work with the insurance company to develop insurance products based on "improving Autopilot safety performance and reducing vehicle maintenance costs."
In Hong Kong, China, Tesla chose AXA as its partner last year; in Australia, Tesla chose QBE Insurance Group; and most recently in the United States, Tesla selected Liberty Mutual—and Liberty Insurance Group also has a wholly-owned subsidiary in mainland China, Liberty Insurance Company Limited.
According to a report by the U.S. National Highway Traffic Safety Administration (NHTSA), in the United States there is one death for every 90 million miles driven, whereas Tesla vehicles have driven 200 million miles with only one fatality to date. Outside observers believe that as Autopilot assistance technology becomes more advanced, the probability of Tesla accidents will become lower and lower, which means some traditional areas where auto insurance is purchased annually will suffer an impact. As Tesla's insurance plan is rolled out globally, transforming the auto insurance industry is no longer out of reach.
A person from a property insurance company told a reporter from International Finance News that there is currently no separate insurance plan for Tesla vehicles in China; they all follow the traditional auto insurance model like other brands. In the long run, this new insurance system Tesla is promoting for electric vehicles and autonomous driving may have relatively expensive premiums at first, but as claim rates decline, many customers will support this one-time premium payment approach. The entire insurance industry may therefore face risks such as a shrinking market size and declining profits.
However, how to determine liability and settle claims for accidents in autonomous driving mode remains controversial at present. Whether insurance companies should bear all the corresponding costs, or whether responsible parties such as the automaker or the car owner should share the liability, has not yet been definitively settled in the industry.
While vigorously promoting its insurance plan, Tesla must also solve its production problem. At present, Tesla's "affordable" Model 3 is stuck in an awkward "production hell" phase: it was originally scheduled to produce 1,500 units in the third quarter, but only 220 have been produced so far, and the fourth-quarter target of 20,000 units will also be hard to meet. Since March last year, Tesla has received orders totaling 500,000 vehicles worldwide. Tesla recently explained that both its car factory in California and its battery factory in Nevada are already running at full capacity, and due to capacity bottlenecks, it may take longer for Model 3 production to reach expectations.
Source: International Finance News 2017-10-17