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Amid deepening problems with its solar business and preparations to begin producing cars in China, Tesla has announced a new insurance service for Tesla owners.
According to the company’s website, “Tesla Insurance is a competitively priced insurance offering designed to provide Tesla vehicle owners with up to 20% lower rates, and in some cases as much as 30%. Tesla Insurance offers comprehensive coverage and claims management to support Tesla owners in California, and will expand to additional U.S. states in the future. Tesla Insurance offers a convenient monthly payment with no hidden fees or charges. Customers may cancel or change their Tesla Insurance policy at any time.”
Commenting on the news, Jalopnik’s Aaron Gordon said the new venture is an ambitious bet typical of Tesla but its chances of success are far from certain.
Given that auto insurance is a low-margin business, offering discounts as steep as 20 percent, to say nothing of 30 percent, is a big bet that their data isn’t just a little bit better, but a lot better,” Gordon wrote. “And it’s a risky bet given Tesla’s current financial situation.”
After turning into the black during the first quarter, Tesla slipped into a loss again during the second quarter and is in the midst of an extensive cost-cutting plan announced by Elon Musk in May. At the time, the Tesla CEO said the company had 10 months to reach breakeven using the funds raised through a US$2.7-billion placement of shares and convertible bonds.
As it seeks to turn things around without compromising its production growth plans, Tesla is also busy trying to revive its solar business, which has been underperforming the sector. Whether or not this is the best time to make such a serious bet as auto insurance is questionable but so are many of Tesla’s undertakings.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.