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Comment by throwanem | Hacker News Reader

Oh, Tesla has its own insurance underwriter? That's normal for an automaker, right?

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.

I'm not saying I can't see sense in that level of integration, just that I can't think of another automaker offhand that does business in the US that way, underwriting auto insurance policies specifically through a wholly owned subsidiary.

Maybe I would know differently if I'd ever bought a car new off the lot, but I'm still driving the one I bought in 2019 and back then it still made sense to look at buying new as mostly a waste of money.

Ford has the Ford Motors Credit Company, for example. I got a car loan from them at one point.

The story I've heard is that general motors down fall began when they stopped writing loans for other car manufacturers. They used to under write basically every car loan in the US.

I've never looked into how truthful it is, but it smacks of idiotic/arrogant executive tropes so well I almost don't want to discover it's false

Oh, I see, I wasn't clear. I meant specifically a policy underwriter, as opposed to something like GMAC of old. I've updated my original comment with the necessary adjective.

Looking over GMAC's history via Wikipedia, I find they did underwrite insurance for a time and that no other US insurance company originated within an automaker. That suggests to me Tesla's operating model here is indeed about as unusual in context as I originally - well, intuited, I suppose. I think that's interesting.

Tesla's entire way of conducting business is new.

No other auto maker before them (to my knowledge) has built their own grid of gas stations, no auto maker went to the efforts that Tesla did to vertically integrate, no auto maker completely ignored the "classic" model of independent dealerships to sell and service their cars... it makes sense that they're about the first ones (at least in America) to change how the financial side works as well.

Oh, good grief, lots of companies have done things like this before. What do you think it took to drive adoption of automobiles in days before the infrastructure was ubiquitously available to support them, the first time? Have you never wondered why the premier award for quality in classical European cuisine shares its name with a brand of tire? On that side of things they're working out of a playbook older than you and me put together.

Lots of people have been "innovating finance" lately, too, not just Tesla. How has that been working out? I hear it's going great...But we were really talking about insurance in any case, the financialization of which has also I believe gone quite poorly well within living memory. Are you of age to recall the name "AIG?" 'I thought not...it's not a story the Sith would tell you.'

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