Tesla CEO says company’s auto insurance product is awaiting closure of an acquisition
Published: June 13, 2019
Updated: June 30, 2019
Author: Luke Jones
CATEGORY: Car Insurance
Tesla CEO Elon Musk has told company shareholders that his plans for a proprietary auto insurance solution will move ahead. However, Musk says the delay in launching the product is because Tesla has made an unnamed acquisition.
Musk has been discussing his plans for Tesla to sell its own auto insurance for several years but stepped closer this April when Musk announced a solution was imminent. However, no product launch as followed.
The carmaker believes delivering its own auto insurance will allow customers to buy more affordable coverage, and Tesla can take driving data from its Autopilot system to determine policy costs. Musk says the company is waiting for an important acquisition to clear before the product is finalized.
“We’re pretty close to being able to release that,” he told shareholders on Tuesday. “We have a small acquisition that we need to complete and a bit of software to write.”
Many still think Musk is posturing to gain shareholder support through testing times at Tesla. Industry insiders have suggested Tesla’s auto insurance plans will not work.
While automakers are likely to become big players in car insurance as vehicles become more autonomous, business insiders believe Tesla will find the market tough. Among those questioning Musk’s plans is Warren Buffett, CEO and chairman of Berkshire Hathaway, points to General Motors as an example of automakers in insurance can fail.
“General Motors had a company for a long time called Motors Insurance Company,” Buffett said recently. “And various companies have tried it.”
“I would say that the success of the insurance company — of the auto companies getting into the insurance business — are probably about as likely as the success of the insurance companies getting into the auto business,” Buffett added.