Elon Musk Catches Backlash for Early Flaws in Tesla Insurance

Elon Musk took matters into his own fingers today and pumped the new Tesla auto insurance on Twitter. The rock-star smart-guy, known for space travel and smoking weed on podcasts, tweeted that his company’s new insurance should be “20% less than [average].” At the end of the tweet, he asks for “critical feedback.” He got it.

Try Tesla Insurance. Should be ~20% less than avg. Currently only in California, but expanding soon. Critical feedback much appreciated. https://t.co/L8xv8vxllj

— Elon Musk (@elonmusk) September 3, 2019

Elon Musk Truthers Out in Full Force

The Musk distrust was strong on Tuesday. One user asked the Tesla CEO how he planned to insure for the high fire and death rates for Tesla. According to a report by the Highway Loss Data Institute (HLDI), Tesla had the highest rate of non-crash fires. The same user also wondered if Tesla’s higher death-rate was included in the price of insurance. 

IIHS just reported that Teslas have 2-4x the fires compared to regular cars, with up to 7x the damages.

How do you plan to insure that?https://t.co/VPFwH9OxwY

— “Elon Says” (@ElonBachman) September 3, 2019

Another user claimed that insurance is only cheaper because the default coverage on the home page is “awful.”

Critical feedback:

Its not actually cheaper you just set the default to awful coverage so that makes the sticker price deceivingly cheap

— elmerFUDD (@PlugInFUD) September 3, 2019

Some people even said the price of their coverage went up with Tesla’s insurance. The tweets came days after Tesla paused insurance sales to update their algorithm. Some thought the update came in response to similar claims of high quotes. 

My Costco affiliated insurance has more coverage and it’s cheaper than Tesla. But keep up the good work for the folks who do get a better deal @tesla

— Nomad Tesla (@nomadtesla) September 3, 2019

Was more expensive in my case. I want to give you more money sir, we got two model 3 but coverage was less and $900 more / vehicle , me = face of sadness

— Ivan Vazquez (@socalivan) September 3, 2019

I believe it’s great for most but Tesla quote was ~50% more than current insurance with Geico ($1125 vs $750) for the same coverage.

— Doug Simpson (@dougsimp) September 3, 2019

Buffett Warned Tesla Against Auto Insurance

Tesla launched its auto insurance services last Wednesday despite Warren Buffett’s warning to steer clear of the industry. Buffett said earlier this year that, 

“The success of the auto companies getting into the insurance business is probably as likely as the success of the insurance companies getting into the auto business.”

Musk rebuked the billionaire hedge-fund manager by claiming he said Teslas were “1000 times more fun” than Honda Accords.

That’s a direct quote from Warren Buffett

— Elon Musk (@elonmusk) May 4, 2019

Musk Still Has Plenty of Fans

Not everyone hates Musk’s new insurance model. A number of different Twitter fans said their insurance was lowered with Tesla. One even claimed his rates were cut in half.

Welp, just got my @Tesla insurance today. Quotes much cheaper than what I previously had and way better coverage too. Saving about $60/mo. Thanks @elonmusk

— Mark Linsangan (@HeyMarkL) August 30, 2019

@Tesla Insurance released just in time!! Holy crap- almost 50% cheaper!! ?? pic.twitter.com/E5hmYvN9UB

— Raymond Luong (@luongray) August 30, 2019

How does the company manage to offer such low-rates?  According to its website, Tesla can offer these rates “by pricing policies to reflect Tesla’s active safety and advanced driver assistance features.” Obviously, Tesla’s safety could be a bit more active. A more likely reason they can offer lower rates is that they spend no money on ads. 

Tesla insurance has an advertising budget of $0.

That means that instead of spending your money to make a talking Gecko deliver a catchy pitch, @elonmusk and his team will let you keep it.

Isn’t that nice? pic.twitter.com/nRMqGXRLWw

— Steve Jobs Ghost ? (@tesla_truth) August 30, 2019

While it remains to be seen if Tesla’s new insurance will succeed, it’s certainly off to a shaky start. But after navigating his way out of Chinese tariffs, Musk clearly has a few tricks up his sleeve.