Elon Musk – Tesla CEO – usually finds ways to hit the headlines for his business decisions.
And the technology entrepreneur has recently started to offer auto insurance policies to its vehicle owners in an attempt to diversify his services.
The expansion has been rumored for at least 4 months after Musk told analysts his company will provide auto insurance policies to consumers who buy or lease his vehicles.
The entrepreneur is confident about everything he learned about car ownership to a point that he will be able to issue insurance rates that are 20% to 30% below those issued by conventional auto insurers.
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By penetrating the insurance market, he will most likely alleviate the continuous complaints from his customers who seem unable to find ideal policies.
Tesla has launched insurance services to its customers in California as an initial move to capture the interest of its stakeholders. Yet, the company founder plans to expands its services throughout the country at some point in the future.
Insuring electric vehicles for future projects
For now, the company is only offering insurance for personal use, but Musk has also expressed his interest in selling commercial policies.
This move will be inevitable once Musk proves that he could sell vehicles that no longer require drivers to sit behind the wheel to operate them in the next 16 months.
Self-driving vehicle evangelists are quite skeptical about the success of his vision though. Yet Musk has promised to sell a line of robotic vehicles as part of his decision to start a ride-hailing service by the end of next year.
Musk knows his ride-hailing service proposal could only be successful as long as he expands to commercial insurance, and things seem to navigate that road so far.
Both, autonomous vehicles and auto insurance, efforts that together makes complete sense in the eye of the Pretorian-born entrepreneur.
A strategic move that targets a financial recovery plan
Without a doubt, the auto insurance market will be a major revenue booster for Tesla which is going to be enough power for the company to explore unchartered territories.
The company has remained profitable during the last half of 2018, but it has recently suffered a $1.1 billion loss during the first of 2019.
Such loss could even deteriorate his company if the company fails to capitalize in the auto insurance market.
In fact, Tesla’s financial losses and uncertainty caused the company to plunge its stock by 35% so far this year, which seems to be enough pessimism for investors.
Tesla, in support of his vision, believe it has learnt substantially about technology, safety, and auto repair costs. The company feels confident about their ability to price their policies competitively.
Not to mention that its electric vehicles were manufactured with the latest features to monitor driving habits and identify risky behaviors. But Tesla said they won’t incur in such procedures.