Even Tesla's Insurance Arm Is Getting Wrecked

Curious: why white Model 3s specifically?

I can only speak to my area, but Tesla drivers north of San Diego started driving noticeably less idiotically when local dealerships started to be regularly protested.

one would think the global -lets deface teslas- movement might have something to be with insurance premiums going up for teslas no?

From what I gather it’s mostly propped up by people who believe Tesla will be more than just a car company but will instead expand out into some general robotics company.

Which is really pretty standard for any tech company whose valuation doesn’t make sense. People are betting the future will be brighter and have more revenue from new products.

People buy stocks betting on their guess of what will happen in the future.

Toyota = safe, predictable, steady ship

Tesla = wildly profitable for many for years, but incredible unpredictable.

It seems many are still guessing it’s going to go up in the future.

I don't understand it either, but I think it means that more needs to be done. We must establish that tinkering with politics was a good way to scare off investors. These investors are not yet scared enough.

Tesla stock is extremely volatile. It dropped 56% from the high in december, and is now trading at 40% below the all time high.

Well one could make the argument that Musk is a short or medium term problem and that in 4 years when Trump is gone everyone will forget about hating on Tesla and it will be a great car company again. Musk is in his 50s and won’t be CEO forever. So if your investment horizon is 10+ years and you don’t predict total company collapse then it might be a bargain time to buy.

Stock market is largely a casino, TSLA is basically a memecoin.

It’s annoying because I have a more optimistic view than most on the long term prospects of the company, but this stock behavior makes it hard to place such bets.

> then why on earth is the Tesla stock not going down?

“Markets can remain irrational longer than you can remain solvent.”

TSLA's value has never been correlated to the fundamentals of the business. So it continuing to do so isn't super surprising.

As long as there's a steady supply of unsavvy investors/future bag-holders willing to buy, it'll keep climbing.

TSLA has never traded in line with fundamentals. If the price wasn't rational then, why should it be rational now?

Also note that the CEO has close ties with government, so some people might be betting on Federal contracts or some kind of bailout.

I have a hypothesis that the reason Musk went all-in on Trump was because Trump would keep BYD out of the North American market. There's been whispering for years about BYD building plants in NAFTA nations or perhaps even in the USA (like Toyota and Nissan did), and even with significantly higher costs BYD would probably annihilate Tesla. A higher-end US-market mid-priced BYD EV with 300+ miles of range that undercut the model S would be deadly.

If we had global free trade with no tariffs China would absolutely dominate this sector as well, at least for mainstream vehicles.

You'll never get a satisfactory answer, but there's presumably:

* some coefficient of meme-stockery (trading in expectation of other people's memetic interest in the stock, like GME) and

* some other coefficient of Tesla's long term vision (gigafactories, their distribution system, their place in the market for power delivery, &c).

Neither of these would be especially sensitive to Tesla's recent performance; Tesla only has to stay viable for both those payoffs to remain plausible.

All good answers here. I have one addition: Zero interest rate regime we had since the financial crisis meant the money supply was cheap. It was enough to just hype yourself to the investors to get money, and Tesla did exactly that and got incredible valuation. That cheap money supply dried out, but the high valuation of Tesla became in itself to keep its outlook good, so it's self sustaining so far in a fragile state. Exactly how fragile is it, nobody would know, but typically you need good profits and earnings to be a stable investment. In a world with a lot of viable alternatives and heating up competition, Tesla needs like a monopoly in a technology or market (be it autonomous driving, be it banning all electric cars in Western hemisphere except Teslas by presidential decree) to not be a ticking time bomb.

Well it's you who thinks stock price is correlated with market performance. It's a subjective take obviously as clearly illustrated by Tesla. Stock price like anything else is just a belief.

I mean, even if none of that were true, the valuation would still make absolutely no sense. If you, as an investor, have decided to make an investment that makes no sense at all based on the fundamentals, why would you turn around and go "the fundamentals I was previously ignoring have gotten somewhat worse, I should sell this"?

(Interestingly, people _do_ do this to _some_ extent, though. Notably, Trump's joke of a social media company took a significant temporary hit on releasing bad financials, even though of course the financials are completely irrelevant to the valuation; it has revenue of less than a million per quarter and a market cap of over five billion.)

> If Tesla sales are down, the Cybertruck is an unmitigated failure and now they are losing money on insurance, then why on earth is the Tesla stock not going down?

Great question. Tesla's latest quartely report was very negative across the board. Normally stocks tank after a report even half as bad. But Tesla has been on a wild rally since the report came out. No, I can't explain it.

The Model S and Model X were the first two vehicles to get 5 star crash safety in every category from the US and the EU. Supposedly broke the testing machines (leading to Elon saying 5+ stars)

They are among the safest cars on the road.

Sorry how is this story relevant to the article?

I think the real problem here is that many of the things that get wrecked are specifically designed to get wrecked rather than the driver.

> I actually think government should create liability limits for vehicles

This is effectively already a thing in most US insurance markets. TDI (Texas) requires $25k minimum coverage for property damage, so in general this is what everyone is going to have.

If your car is worth more than that and someone runs into you and totals it, you are ~fucked unless you have additional un[der]insured motorist coverage on your side. Suing someone for the difference is a 10/10 nightmare experience. Many people who are driving like ass also seem to have really bad financial situations. There is such a thing as being so poor that you are judgement proof.

The overall effect of this is that drivers of high value (i.e., luxury) vehicles typically take it upon themselves to ensure the safety of their property. They don't make it the problem of everyone else. If their Faberge egg of a lambo gets wrecked, they understand the other parties probably aren't going to be able to replace it. Certainly, follow through with everyone's insurer and wring every policy dry, but the rest is up to the presumably wealthy luxury vehicle owner.

If you are driving a luxury vehicle and cant handle the risk of an underinsured driver totaling it, you should question if you can actually afford the vehicle.

Overall, your argument is not wrong - however...

The cost comes from "Tesla approved body shops" - which have some sort of monopoly on doing body work.

That is, if you don't want to possibly have arguments with Tesla if something is wrong which they may try to attribute to the car being repaired in some back-alley kind of workshop...

To add, body shops apparently rather replace whole parts which could have straightened out by a skilled repair guy.. for much less, achieving the same thing and even keeping the original panels, welds etc...

Talking about repairability - i really have to give Tesla credit for making the whole of all maintenance manuals (same Tesla themselves have) available for free.

It doesn't help that the official Tesla repair guide essentially says "Order a new side panel for the car, cut the damaged section from the car, weld in part of the side panel".

And the side panel in this case stretches the entire length of the car.

> It's insane that these cars are designed in such a way that even minor fender benders cost tens of thousands to repair.

Twenty years ago I paid about $2000 - not inflation-adjusted, that figure - to put a new bumper on an Audi whose owner, looking back, no doubt had much better reason than I to leave our respective insurance companies out of the matter. At the time it was a shocking amount. These days, even the inflation-adjusted equivalent - nearly five grand! - seems like something a lot of car owners are happy, or at least willing, to swallow.

> All that said, I think Tesla and the EV industry as a whole will need to do a lot to bring down their repair costs. It's insane that these cars are designed in such a way that even minor fender benders cost tens of thousands to repair. I actually think government should create liability limits for vehicles to incentivize car makers to make repairable cars.

That's fundamentally impossible. Just look at car crash ratings and automotive deaths over the last decades.

These old rigid steel frames were damn easy to repair - but were deathtraps for people inside and outside, not to mention Cw values more similar to a brick wall than a F1 car. The reason modern cars are so crash-safe is because literally everything is a crumple zone, absorbing kinetic energy. You can't just heat up and bend affected parts any more, you got to replace them.

And on top of that, requirements on lower fuel usage mean that parts have to be aerodynamically optimized and as lightweight as possible, which means plastics and composite materials, hollowed out shapes and god knows what else. That's making parts more expensive to manufacture and replace as well.

> All that said, I think Tesla and the EV industry as a whole will need to do a lot to bring down their repair costs

It's not just Tesla, and it's not just the EV industry either. It's not even recent. My ten year old car has some scratches in a plastic body panel and minor bumper damage thanks to me backing into something. Stupid, I know, but that thin piece of formed plastic should not cost me €700 and the bent plastic bar should not be costing anywhere near €300 to order. The mechanic is expensive enough already. Luckily I don't care about a bit of visual damage, but it's still infuriating.

More and more cars are cheaply produced, with maintenance as an afterthought, and that leads to flimsy, difficult to replace, specialised components, often non-modular to save on production cost.

The cost for cheap manufacturing is blindly passed onto insurance and now a kid on a bike can bankrupt their family by accidentally hitting a Tesla. It's ridiculous. But it's hardly a Tesla-only problem, and it's been going on for years.

An underwriting loss, when you specialize in a very specific risk, is not something you can later make up with volume. They still have to pay for overhead, acquisition costs, etc. And customers have little loyalty for auto insurance. If they only join in the first place because your prices are lower, they will leave as soon as you raise them.

Most insurance companies would be very concerned this type of concentration of risk, and having no underwriting pricing advantage. At best you can say Tesla wants their insurance to be a loss leader to encourage sales of the cars themselves, and to prevent the risk of other auto insurance companies declining to cover their models due to high repair costs and their customers having no insurance alternatives.

Some of the traditional insurance companies do this too, by having an ownership stake in the repair facilities, so they also buy repairs "at cost."

Dealing with anything financial has been the norm for car manufacturers for many decades.

Germany's Volkswagen for example has its own insurance and banking arm. The bank got established in 1949, however I couldn't find out when they expanded in insurance.

Kinda makes sense - selling cars is a cut-throat business with ever tighter margins, the real money is to be made in financing/leasing, insurance and aftersales services.