On Wednesday, Tesla (TSLA) reported worse-than-expected losses and revenue for the first quarter in 2019 due to a weakening demand for electric vehicles in the U.S. But the struggling company may soon have a fresh revenue stream to offset the slowdown in car sales.
During an investor call following the earnings release, CEO Elon Musk said that Tesla is working on an insurance product that could launch as soon as next month.
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“We are creating a Tesla insurance product and we hope to launch that in about a month. It will be much more compelling than anything else out there,” Musk said when asked about the rumored program.
Musk reasoned that an insurance product is a natural next step for Tesla given the amount of driver information the company has on hand.
Tesla has access to “direct knowledge of the risk profile of customers based on the car,” which gives the company a significant “price arbitrage or information arbitrage opportunity,” he explained. “[If Tesla owners] want to buy Tesla insurance, they have to agree to not drive the car in a crazy way—or… they can, but then the insurance rate is higher.”
Currently, Tesla shares detailed safety information about its Autopilot program with insurance providers to help determine rates.
“Obviously as we launch our own insurance product next month, we will certainly incorporate that information into the insurance rates,” Musk said.
Some Tesla owners may be in urgent need for such a program. Just four days before Musk’s big announcement, a parked Tesla Model S car burst into flames in a garage in Shanghai, China. No one was hurt. Surveillance footage of the incident went viral first on Chinese social media, and then on Twitter, as Tesla set up a team to investigate the explosion’s cause.
https://twitter.com/SputnikInt/status/1120245857398296577
“The car fire is just another data point of continued difficulties,” Roth Capital analyst Craig Irwin wrote in a comment for Reuters. “Not a lot of good news for Tesla these days.”
On Wednesday, Tesla reported a quarterly revenue of $4.54 billion (versus $5.19 billion expected) and a loss per share of $2.90 (versus $0.69 expected), confirming its warning last month about falling demand in the U.S. partly due to the phase-out of federal subsidies for electric vehicle sales.
