Tesla’s Move: Lowering Insurance Costs with GEICO Executive

What?

Tesla has brought in a seasoned executive from GEICO to aid in driving down insurance costs for its electric vehicles. Over the years, Tesla has made efforts to create and partner with insurance products to combat the high insurance expenses associated with owning their vehicles. While Tesla has successfully decreased the cost of their cars over the last five years, expenses like insurance and interest payments have remained substantial. The company believes that a reduction in these costs could lead to higher demand for their vehicles.

Why does it matter?

Initially, Tesla collaborated with established insurance companies and later launched its own insurance product in California in 2019. However, this product did not incorporate real-time driving data or Tesla’s safety score, which was the original intention. The company sought to enhance its safety score system before expanding the insurance product to other markets. This safety score system utilizes real-time driving data from Tesla vehicles to evaluate driver performance based on various factors like forward collision warnings, hard braking incidents, aggressive turning, unsafe following distances, and Autopilot disengagements.

In October 2021, Tesla rolled out its new insurance product in Texas based on the safety score and has since expanded it to numerous states. Despite its launch, the product has faced controversy due to its pricing being tied to real-time data, which may not align with the enjoyable performance of Tesla vehicles, making it a less than ideal choice for some consumers. Recently, Tesla brought on Allen Laben, a veteran from GEICO, as the Head of Insurance Partnerships, with a focus on making Tesla vehicles more affordable to insure through collaborations with insurance companies, internal Tesla teams, and collision repair shops in the USA and Canada. Laben’s objective is to reduce the total cost of owning a Tesla and drive the transition to sustainable energy.

How is it going to shape the future?

Tesla’s decision to hire an industry expert like Allen Laben signifies the company’s commitment to tackling high insurance costs associated with its vehicles. By leveraging Laben’s expertise and focusing on partnerships with insurance companies, Tesla aims to further reduce the financial burden of owning a Tesla. This strategic move may not only make Tesla vehicles more accessible to a broader range of consumers but also contribute to the acceleration of the global shift towards sustainable energy sources. As Tesla continues to navigate the insurance landscape and enhance its offerings, it will be intriguing to see how these efforts shape the future of electric vehicle ownership and insurance practices.