Why Warren Buffett is Wrong about Tesla Insurance

Elon Musk has announced that Tesla will introduce its own car insurance product that will be better than anything else out there. Immediately after, billionaire Warren Buffett gave his opinion that Tesla Insurance was a terrible idea and would essentially fail.

We believe Warren Buffett is wrong about Tesla insurance and explain why Tesla will have a large advantage when deploying its own car insurance product.

#TeslaInsurance #ElonMusk #WarrenBuffett

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[networm]

Agree with all your points. I'd also like to add that selling insurance for their own cars motivates them to improve the quality and safety features of their cars so that accidents and claims as a result can be minimised, especially since they can easily determine if the fault lies with the car, the driver, or the 3rd party.

[pjdambra]

I will sign up with Tesla Insurance on the very first day. Tesla also keeps track of mileage. Hopefully they can pro rate costs with usage. Sounds like a great plan..

[underbarrelpbcam]

Warren buffet: Insurance is a tricky business.
Elon musk: So is building rockets but here we are.

[scoopbls]

85% of claims are rear ending someome. Knowing the stopping distance you keep from the vehicle in front of you on average and the varience of distance kept is the information Tesla will have that insurance companies won't have. That's the key for Tesla to out compete then.

[tonyggir]

Buffett is wrong. I think Tesla owners will want to sign with Tesla’s insurance

[claudiomaiasantos]

one of the biggest expences on ensurance is fraud.
I think Tesla can significantly reduce this kind of cost with all the data avaliable.
Not only that, it can determine who is right or wrong in some accident situations, and even produce evidence against third parties.

[crisg.]

Totally agree with your points. In addition, if Tesla insurance does come to fruition, it will ultimately cause the other insurance companies to lower prices and stop their gauging. They'll either lose business or lower prices. Brilliant move by Musk.

[mortentoensager]

Biggest benefit: Ever client pay up front, very good for Tesla's cash flow. Insurance was how Buffet got rich, by getting cash up front to invest.

[TomVillars]

Maybe I missed this in the video but the driving data already being collected for improving the self driving AI is the key to offering personalized insurance rates. An AI trained with the existing fleet wide driving data could accurately predict your accident rate allowing TESLA to offer "safe" drives better rates than any other insurance company. And of course the "not safe" drivers would be quoted such an outrages rate they'd go somewhere else which is also good for TESLA but not so good for Warren Buffet.

[rossdavis]

This is super obvious; Warren Buffett is talking poorly of Tesla because they are his competitor. Of course, he would do this to try to uplift his own business by association.

[lachoneu]

The whole point of Tesla starting this is to avoid lawsuits when an auto insurance company refuses to pay because the car was in autopilot.

[satnitcboy]

Auto insurance is a moneymaker. I'm an admirer of W Buffett, but it's reasonable to assume that he doesn't invite inroads into his business - especially by auto makers. Beyond the immediate goals, Tesla's stated intention to operate a huge fleet of robot taxis is more than a hint that they will be their own biggest customer for the insurance product. It makes sense to be partnering with someone so they can tailor the product to their need. It seems to make perfect sense.

[brickhunter]

This is like big oil company or ice auto company saying EV will never work.

[chunglee]

Common sense tells me selling insurance to Tesla’s own cars is a good idea and makes economic sense.

[skydivekrazy]

Any body else with a brain think he's terrified of competition from Musk?

[shivkuma]

Insurance is also important for car related downstream revenue ... Eg Tesla network, Turo style day rental of Tesla's etc

[TColey]

Great stuff as usual! Warrant Buffet is a business man and is looking out for his bottom line. He's a numbers guy and understands the extreme pressure Tesla is placing on the auto industry; they are cannibalizing their competitors by selling cars at luxury prices and selling much more. Tesla continues to increase sales whilst the competition are seeing reductions for similarly classed vehicles. There's no way Buffet would be happy about that kind of brand recognition and the huge following Tesla has moving in on his turf to begin taking market share. Granted, it would take some time to rival that annual premium Geico writes but it's more about providing a viable alternative.

I have no reservations with Tesla partnering with Markel Insurance to bring a more fair pricing structure to the insurance table which will undoubtedly help sell more vehicles. Consumers are generally loyal to the lowest priced insurance that provides the proper coverage. The insurance industry has forced many of us to play the game of hopscotch annually in search of the lowest cost. I'd sign up in a heartbeat if the price is right. #checkmate

[matthewspencer]

They can use shadow mode/software limited speed to better estimate premiums
Insurance policies will add value to Autopilot.
It will give them greater control over the life-cycle of their vehicles.
It guarantees most wrecked Tesla's won't be replaced with their competitors cars, and gives them an opportunity to up-sell when replacing.


* Any crash using autopilot will not change/require any excess/premiums.
* The more you use autopilot, the lower your premium.

It will make the car look more attractive by lowering that 'Total cost after savings' number when autopilot is ticked.

Tesla can control who repairs their cars, rather than an insurance company having the repair done by a non Tesla representative adding value to that area of their business.

Written off Tesla's can more easily be recycled. Tesla are investing in a battery recycling system, they will run that more efficiently if they don't need to purchase wrecked car batteries from 3rd party insurance companies.

Tesla don't have to worry about salvaged Tesla's lowering the prestige of the brand. They have always been somewhat hostile towards people who repair and re-register their cars.

[shepherdsknoll]

I don’t think Tesla needs to make money at insurance either. I believe the point is to provide insurance for autonomous vehicles. Remember, there will be a lot of cars driving around by themselves. I would imagine there is a whole new set of liabilities that Tesla will need to assume at first. This insurance will accelerate the change to autonomy.

[Stidfolle]

Whats the point of having a Tesla if I can't have fun with the acceleration? Not all the time mind you. It'll be nice to have insurance that understands the car.