That’s the offer the CEO of Lemonade insurance made to Elon Musk, citing the fact that FSD is now 10 times safer than a human driver.
intercst
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Presumably there would be some due diligence on that 10x safer number. (this alone is likely a show stopper)
I’m skeptical this (near zero insurance cost for FSD miles) would happen, but show me the data and I can be convinced.
It takes an apples-to-apples analysis, trying to control for all of the variables that affect accident rate (driver demographic, route, vehicle type, wtc).
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Maybe insurance is a loss leader and Tesla is making it up on vehicle sales mark up?
intercst
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No one makes the decision to purchase a Tesla based on the promise of cheap insurance. That’s not the tipping point.
Plus Tesla’s margins are plummeting. If they are trying to make up the insurance losses on vehicle markup they are doing a bad job.
I think it is more likely Musk’s hubris overrode business reality.
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The fact that Teslas cost more to insure than other cars was the reason that Tesla started a captive auto insurer.
However, I will say that when I traded in my 20 year old V-6 Nissan Altima last April for a 2020 Tesla Model Y Dual Motor, Performance Boost, the premium on my State Farm liability only $1 MM coverage auto policy didn’t change. It was still $203 for 6-months.
intercst
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When there were no chargers Tesla built chargers. When insurance was too expensive, Tesla sold affordable insurance. Not sure about computing power, Tesla created DOJO.
Do you see the pattern? It’s not about the individual service but about the whole business, about the ecosystem. Loss leaders? Yes, there is a good reason for them.
Buy only stocks that will bounce back, that’s how you make volatility your friend.
The Captain
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Even in FSD there are going to be accidents. In a no-fault state, the insurance has to pay even if it’s not your fault. I would guess some significant proportion of FSD accidents are attributable to “the other guy”, so “10 times safer” seems a real stretch (but I would love to see the data.)
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Ah, ok.
Now I understand why Cybertruck exists.
Loss leader.
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Clueless!
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The data are…friendly. NSHTA counts any accident including fender benders as an accident. Tesla defines an accident when the airbags go off or the car is undrivable. It is not considered an FSD accident if FSD has been disengaged for 2.5 seconds before the collision.
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Please elaborate.
Can you explain the net total shareholder value created by Cybertruck?
I don’t see it and neither do many others.
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No because the Cybertruck is not a loss leader. Look up the definition of Loss Leader.
AI Overview
A loss leader is a product sold at a loss to attract customers and stimulate sales of other, more profitable items. This pricing strategy is used by businesses to draw customers in with an attractive price on a popular product, hoping they will then make additional, profitable purchases.
How it works
- A company chooses a popular product (the “leader”) and sells it for a price below its actual cost.
- The low price is designed to attract customers who might not otherwise visit the store or website.
- Once in the store or on the site, the customer is encouraged and expected to buy other, higher-priced items that are not on sale.
- The overall goal is to make a profit on the total purchase, compensating for the loss on the single “leader” item.
Examples
- Grocery stores:
Often sell staple items like milk, eggs, or bread at a loss. They are frequently placed at the back of the store to force customers to walk past other profitable products.
- Electronics:
A company might sell a game console at a low price with little to no profit. The real revenue comes later through sales of games, subscriptions, and digital content.
- Other retailers:
A store might use a discounted rotisserie chicken as a loss leader, as seen with Costco.
The Cybertruck is dud. Look up the definition of Dud. Battery swap was another dud. Solar City was a third dud but it gave rise to battery storage which is doing rather well.
Dojo was neither Loss Leader nor Dud but it served its purpose.
Then there were the excessive robots at Fremont.
Ford had its Edsel moment. Edison failed hundreds of times before getting the lightbulb right. Westinghouse and Tesla beat the pants off Edison who championed DC.
Etc., etc., etc., etc., etc., etc.,
The Captain
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Thank you for explaining.
I was wrong according to above.
Cybertruck is not a loss leader.
It is just a plain old loss, without the leader part.
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After intensive research, I found the answer.
Tesla insurance is a passion project. It’s putting customer experience top of mind, bigger than the economics:
And creating a dream experience of same-day repair.
Paraphrasing: “customers can dream about same-day repair.” (or is that the actual experience?)
“Tesla Insurance is notorious for being terrible with their customer service. Squeaky wheel gets the results so I would suggest calling for an update if you haven’t already.”
insurance user experience
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