effectively meaning Tesla has self-insured their entirefleet. The take rate is sure to be incredibly highbecause Tesla will have the best data and therefore, the best pricing. Incremental improvements in active safetyand autopilot will compound across the entire Tesla fleet, saving mountains--I mean MOUNTAINS--ofcash that was once reserved for insurance payouts and will no longer be needed. So too will the exponentially increasing swathesof driver data. Tesla will continue to get better at pricingrisk by using real world, driving-specific data, leading to bigger margins and/or lowerpremiums. Everyone wins. Expansion Into Other Insurance Alright, hear me out. I suspect long term, Tesla will enter homeinsurance and that their foray into automotive insurance is just the first step. The ideal Tesla customers has a Tesla or twoparked in their garage, charging from a Tesla powerwall which was fed by photons collectedby Solar Panels or the Solarglass roof. Easily six-figures worth of Tesla productsin one place. These are all big-ticket items and it makessense that, if Tesla already has insurance infrastructure, offering home insurance isa logical next step. Bundled insurance premiums can be super competitive. Compounded with the innate data advantageTesla has for automotive insurance and it’s not beyond the realms of possibility thatTesla will be able to compete with the biggest in the business by not just offering automotiveinsurance, but home insurance too. And this is a subject for another, more speculativevideo, but I won't be surprised if Tesla gets fully into the smart home business, includingclimate control systems. This would incentivise Tesla even more intooffering home insurance. But more on that in a future video. To sum it up, Tesla insurance is a real “sleeperproduct”. As it’s only available in California rightnow, few owners know of it, few investors think of it and few analysts recognize itspotential. The insurance industry literally
revolvesaround pricing risk. Whoever can price risk best, usually wins. And how do you price risk? With data. The best data means the best value premium. If your data sucks, you have more uncertaintyand need to be more conservitve, thus forcing your premiums higher to cover the “whatifs”. But Tesla will have far fewer “what ifs”. They’ll know more about their vehicles ingeneral terms, and they’ll know more about their drivers than anyone else. And their vehicles get safer over time. You can’t compete with that. Tesla insurance will dominate and transformthe industry. I can’t imagine a future in which MOST Teslaowners are not ALSO Tesla insurance customers. And as this happens, the automotive insuranceindustry is set for major disruption. Picture this. In a world of electric, autonomous vehicles--eachgathering gargantuan amounts of useful, driver behavior and safety data--traditional automotiveinsurance models are worthless. Statistical tables are general and useful,but hyper-specific driver-centric data is on a whole other level and infinitely morevaluable. Once again, Tesla is leading the way and everyoneelse will soon be trying to catch up. The way I see this playing out is that automakersof the future, much like Tesla today, will look to partner exclusively with an insurancecompany (or start their own) which gains opt-in telemetry access to its fleet, enabling morecompetitive pricing on insurance by using driver-specific data over generic actuarialdata. At present, no other automaker or insurercan even collect this data so for now, Tesla Insurance has no competition which means lowerpremiums for customers and higher margins for Tesla. And it only gets better from here. Remember, the safer Tesla’s autopilot softwarebecomes, the less accidents will occur and more “float” can be used to accelerateTesla’s mission. This matters. I’m Steven Mark Ryan, this is Solving TheMoney Problem, and I love you all. Thanks so much for watching. Let me know your thoughts in the commentsbelow. Do you have Tesla insurance? Will you buy it when it's available in yourarea? What do you think of Tesla insurance and thepossibilities with its extensive driver data?
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