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Tesla Insurance: A New And Exciting Frontier
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":874326298,"tweetId":"874326298","gmtCreate":1637732959510,"gmtModify":1637732959816,"author":{"id":3565687171198207,"idStr":"3565687171198207","authorId":3565687171198207,"authorIdStr":"3565687171198207","name":"Holla","avatar":"https://static.tigerbbs.com/c0b0e402ff8043410cc67ffccbfe2174","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":60,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>Like pls</p></body></html>","htmlText":"<html><head></head><body><p>Like pls</p></body></html>","text":"Like pls","highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":2,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/874326298","repostId":1141571893,"repostType":4,"repost":{"id":"1141571893","kind":"news","pubTimestamp":1637732033,"share":"https://www.laohu8.com/m/news/1141571893?lang=&edition=full","pubTime":"2021-11-24 13:33","market":"us","language":"en","title":"Tesla Insurance: A New And Exciting Frontier","url":"https://stock-news.laohu8.com/highlight/detail?id=1141571893","media":"Seeking Alpha","summary":"Summary\n\nTesla Insurance is a new and exciting frontier for the company.\nI briefly explore the curre","content":"<p><b>Summary</b></p>\n<ul>\n <li>Tesla Insurance is a new and exciting frontier for the company.</li>\n <li>I briefly explore the current personal auto insurance landscape and then analyze the Tesla Insurance Offering including the newly introduced Safety Score in Texas.</li>\n <li>I also cover the risks and the financial impact Tesla Insurance could have.</li>\n <li>Tesla Insurance has a long runway ahead but it won't be an overnight success. Nonetheless, I wouldn't bet against Tesla successfully disrupting and competing within the personal auto insurance market.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7f8bf7a2038aee5e70a8ab437ca3712b\" tg-width=\"1536\" tg-height=\"1020\" referrerpolicy=\"no-referrer\"><span>Ridofranz/iStock via Getty Images</span></p>\n<p>What typically comes to mind when you think of personal auto insurance? For the average consumer, insurance is hard to understand, considered expensive, and somewhat boring.</p>\n<p>While that might be true, it doesn't have to be this way. Tesla (TSLA) has introduced Tesla insurance in California and more recently in Texas. With this article, we’ll briefly explore the personal auto insurance landscape, dig deeper into the Tesla personal auto insurance product, and look at what it could mean for Tesla moving forward.</p>\n<p><b>The Personal Auto Insurance Landscape</b></p>\n<p>Personal auto insurance is a mandatory requirement in all but two states within the U.S (Virginia and New Hampshire). Most insurance carriers price insurance using traditional factors (credit score, age, gender, location, driving and vehicle history, etc.) with the option of enrolling into a Usage-Based Insurance (UBI) program.</p>\n<p>A UBI program helps align your auto policy’s cost with your driving habits. Take a look at Progressive(PGR) or Travelers’ (TRV) programs as examples. Nonetheless, traditional insurers still use the aforementioned traditional factors first and foremost with an optional UBI offering.</p>\n<p>The personal auto market wrote about $250B in premium in 2020. There is a ton of opportunity for Tesla to generate meaningful revenue over time. However, the current top 10 players accounted for ~75% or 3/4 of the total written premiums in 2020. State Farm had the highest market share at 16.2%, followed by the likes of Berkshire Hathaway or Geico (BRK.A), Progressive, and Allstate (ALL).</p>\n<p><img src=\"https://static.tigerbbs.com/2897c9ed5291406d6d1c560c1e8794da\" tg-width=\"612\" tg-height=\"383\" referrerpolicy=\"no-referrer\"></p>\n<p>Lemonade (LMND), Metromile (MILE) (recently acquired by Lemonade), Root (ROOT), and others that are only pricing personal auto insurance on how one drives instead of traditional factors are trying to disrupt this massive industry. Tesla is now trying to do the same.</p>\n<p><b>Tesla’s Personal Auto Insurance Offering</b></p>\n<p>Tesla first introduced personal auto insurance in California in 2019 through State National Insurance. More recently, the company took the next step forward in its insurance journey by offering personal auto insurance in Texas through the underwriting company Redpoint County Mutual Insurance. It's important to note that Tesla isn't an underwriting company, it is partnering with underwriting companies to offer its product under the Tesla Insurance name.</p>\n<p>The premium is determined based on what vehicle you drive, your provided address, how much you drive, and what coverage you select. The company is not using traditional variables like credit, age, gender, and claim history to price their insurance. With Texas, Tesla also introduced their UBI program called the Safety Score as an additional factor in determining premium.</p>\n<p><img src=\"https://static.tigerbbs.com/dacd23bb5a7dae5da6bf2ccf5415b666\" tg-width=\"622\" tg-height=\"410\" referrerpolicy=\"no-referrer\"></p>\n<p>The Safety Score is based on driving behavior and assigns the driver a score from 0 to 100 based on five safety factors:</p>\n<p><b>1. Forward Collision Warnings per 1,000 Miles:</b>Audible and visual alerts provided to the driver in situations where a possible collision could occur due to an object in front of the vehicle. Maintaining a safe distance and paying attention to the traffic around you helps improve your score.</p>\n<p><b>2. Hard Braking*:</b>Defined as a decrease in the vehicle’s speed larger than 6.7 mph, in one second. Despite the definition, I think we all know what hard braking is. The Safety score can be improved by engaging the brake pedal early when slowing down, coming to a stop, or reacting to a change in the environment.</p>\n<p><b>3. Aggressive Turning*:</b>Defined as an increase in vehicle’s speed to the left/right greater than 8.9 mph, in one second. Again, we all know aggressive turning when we see it. The Safety Score can be improved by turning, changing lanes, or rounding a corner gradually instead of aggressively.</p>\n<p><b>4. Unsafe Following*:</b>Tesla vehicles measure their own speed, the speed of the vehicle in front of them and the distance between the two vehicles. Based on these measurements, Tesla calculates Headway, or the number of seconds you would have to react and stop if the vehicle in front of you came to a sudden stop. Unsafe following is the proportion of time where your vehicle’s headway is less than 1.0 seconds relative to the time that your vehicle’s headway is less than 3.0 seconds. Unsafe following is only measured when your vehicle is traveling at least 50 mph. The Safety Score can be improved by not tailgating or driving close to the vehicle in front of you so you have enough time to react.</p>\n<p><b>5. Forced Autopilot Disengagement:</b>If you remove your hands from the steering wheel during Autopilot, an audio and visual warning is sent to the driver. Three of these warnings result in Autopilot system disengagement for the remainder of a trip.</p>\n<p>*Not factored into the Safety Score formula when on Autopilot</p>\n<p>These factors are measured directly by the Tesla models using various sensors on the vehicle and Autopilot software. Although this is a significant step forward in Tesla’s insurance journey, The Safety Score isn’t something that’s new.</p>\n<p>Many major U.S personal auto insurers have introduced optional UBI programs that assign a score to the driver. Nonetheless, there are a couple of meaningful items that differentiate Tesla.</p>\n<ul>\n <li><p>Some of the factors introduced by Tesla in Texas are different to what other insurance carriers have. For example, Progressive doesn’t have forward collision warnings or unsafe following as factors. On the other hand, Progressive includes late night driving and driving less overall as factors within their UBI program. Tesla is likely to introduce new factors and tweak existing factors within the Safety Score as more data becomes available.</p></li>\n <li>Unlike other major carriers, Tesla doesn't require and additional device to be installed in the vehicle to capture driving behavior. Tesla uses specific features within the vehicle to evaluate premium based on actual driving.</li>\n <li><p>The Safety Score is updated daily to provide real-time feedback on driving safety. The daily Safety Scores are combined (up to 30 days) to provide a premium based on the months’ driving activity. Below is an example of how the premium could change based on the score by month. Traditional insurance carriers don’t offer daily updates and change in premiums by month. Instead, it’s typical to have a monitoring period of 6 months before receiving a score and change in premium.</p></li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/1ddc2c7837f9b0fcc32dca3d7729b1b2\" tg-width=\"766\" tg-height=\"261\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"></p>\n<ul>\n <li><p>Based on the introduction of the Safety Score and partnership with Repoint Insurance, Tesla Insurance is the cheapest option for full coverage in Texas.</p></li>\n</ul>\n<p><img src=\"https://static.tigerbbs.com/5cb75573bd60617bd436ac602c36bd13\" tg-width=\"734\" tg-height=\"552\" width=\"100%\" height=\"auto\"></p>\n<ul>\n <li><p>Lastly, and most importantly, the company will be able to leverage first party data to predict collision frequency due to the technology within Tesla cars. Other insurance carriers will likely have to partner with different manufacturers to capture data within cars at the point of sale, Tesla already has first party data.</p></li>\n</ul>\n<p>CFO, Zachary Kirkhorn,explained:</p>\n<blockquote>\n At Tesla, because our cars are connected, because they are essentially computers on wheels, there's enormous amounts of data that we have available to us to be able to assess the attributes of a driver who's operating that car, and whether those attributes correlate with safety.\n</blockquote>\n<blockquote>\n We've been able to go back and analyze that data and we've learned 2 things coming from that. The first is that the probability of collision for a customer using safety score versus not is 30% lower. That's a pretty big difference.\n</blockquote>\n<blockquote>\n It means that the product is working and customers are responding to it. The second thing that we've looked at is what is the probability of collision based upon actual data as a function of a driver safety score. And that is aligning with our models. Most notably, if you're in the top tier of safety compared to lower tiers, there's multiplex difference in probability of collision based upon actual data.\n</blockquote>\n<p>Tesla is looking at hundreds of different variables and billions of miles of driving history to predict loss frequency and price each risk individually. The dataset will continue to grow and get better as Tesla sells more cars and as people drive more. Tesla is planning to launch personal auto insurance in every major market in which they have cars.</p>\n<p><b>Risks to Consider</b></p>\n<p>So far it must seem that Tesla is in a great position to capitalize on this new frontier. While that might be true, we also have to consider a couple of important risks:</p>\n<ul>\n <li><p>It will not be easy to disrupt this massive industry dominated by the top 10 companies. The top 10 and others have a century of insurance acumen have already moved to introduce ever improving UBI programs. Additionally, up and coming insurance pure plays like Lemonade and Root already have or are working to expand on their UBI programs.</p></li>\n <li><p>Personal auto insurance is a complex business with strict regulations by state. It won't be easy to navigate this landscape. Here’s how Elon Musk described it at the Annual Shareholders’ meeting:</p></li>\n</ul>\n<blockquote>\n Tesla insurance. Yes. So, like the degree in which insurance is a regulatory labyrinth is insane. It was like designed to be hard feeling you guys. I don’t know if it’s – but it certainly is very difficult. So, there is a zillion applications, and you have to wait for a bunch of time. And get it’s come long and complicated and a lot of it is state-by-state. Most of it is state-by-state. So, we are just processing applications in states across the country. And then the states also have different regulations. So, you can’t actually – aren’t legally allowed to offer the same insurance in every state. So, you have got to adjust the software to be different every state. It’s basically very complicated.\n</blockquote>\n<ul>\n <li><p>Typically, the unit economics within personal auto insurance have been poor. Even Progressive, one of the best auto insurers on the market, aims for a profit margin of ~6% after accounting for losses and expenses (including claim handling costs). With Tesla’s digital experience, the expenses are likely to be lower than traditional auto insurance sales and service. The loss ratio is much harder to predict despite the Safety Score indicating a 30% lower likelihood of a collision. It begs the question: what type of margins will the company achieve with its insurance offering?</p></li>\n</ul>\n<p><b>Financial Impact of Tesla Insurance</b></p>\n<p>On the 3Q20 earnings call, Musk noted that Tesla has a goal to hit 20 million in vehicle sales per year by 2030. That's a lofty goal but let's use that as a basis to see what impact Tesla Insurance could have on the financials.</p>\n<p>If Tesla can sell 20 million vehicles per year by 2030 and the average cost of Tesla Insurance is $1,795 (based on TX results shared earlier), Tesla Insurance would generate ~$36 billion in revenue by 2030 assuming every vehicle chooses Tesla Insurance.</p>\n<p>Nobody knows if Tesla will sell 20 million vehicles per year by 2030, what the average cost of Tesla Insurance will look like, or if customers will actually buy Tesla Insurance over other carriers. Nonetheless, it is helpful to look at what could happen. As you can see below, even if Tesla doesn't reach 20M in vehicles sales per year by 2030, it could still generate meaningful revenue from its insurance offering.</p>\n<p>Musk specifically stated on the 3Q20 earnings call that \"insurance could very well be 30%, 40% of the value of the car business, frankly.\"</p>\n<p><img src=\"https://static.tigerbbs.com/71469743b3b6f7ffab4202e00bd2a12f\" tg-width=\"625\" tg-height=\"248\" width=\"100%\" height=\"auto\"></p>\n<p>With Tesla Insurance, it's easier to derive top line estimates compared to bottom line estimates. Currently, there is no way to tell what the profit margin for Tesla's insurance product will look like, but, we can estimate.</p>\n<p><img src=\"https://static.tigerbbs.com/ea1219fdafad7124ac4604ee9267da6e\" tg-width=\"624\" tg-height=\"222\" width=\"100%\" height=\"auto\"></p>\n<p>If we assume a profit margin of 6% (based on Progressive) and the best case scenario of 20M vehicles sold per year by 2030, Tesla will generate ~$2.2B of income. If Tesla Insurance can achieve a higher profit margin, it will make a meaningful contribution to overall profit over time.</p>\n<p>Please note that the above examples are merely high level projections and won't be accurate in all likelihood. For example, the 20 million vehicle sales per year by 2030 is a global target and Insurance in certain countries outside the U.S is either not required or treated much differently. It will be easier to predict what the financials for Tesla Insurance could look like as the company expands its products into additional states and as we receive more information.</p>\n<p><b>Conclusion</b></p>\n<p>Tesla Insurance has a long runway ahead but it won't be an overnight success. It will likely take significant time to launch the product in different states. The overall share of new car sales that are EVs within the U.S is expected to be 30% by 2030, meaning that adoption will be slow and steady. As the story unfolds, Tesla will have to successfully compete with age-old and up and coming personal auto carriers, navigate through complex state by state regulations, and try to generate meaningful revenue and profit.</p>\n<p>At this point, I don't know if Tesla will be able to disrupt and compete within the personal auto industry, but time will tell. I know I'll be watching from the sidelines and I wouldn't bet against them!</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla Insurance: A New And Exciting Frontier</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla Insurance: A New And Exciting Frontier\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-24 13:33 GMT+8 <a href=https://seekingalpha.com/article/4471362-tesla-stock-personal-auto-insurance-a-new-and-exciting-frontier><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nTesla Insurance is a new and exciting frontier for the company.\nI briefly explore the current personal auto insurance landscape and then analyze the Tesla Insurance Offering including the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4471362-tesla-stock-personal-auto-insurance-a-new-and-exciting-frontier\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4471362-tesla-stock-personal-auto-insurance-a-new-and-exciting-frontier","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1141571893","content_text":"Summary\n\nTesla Insurance is a new and exciting frontier for the company.\nI briefly explore the current personal auto insurance landscape and then analyze the Tesla Insurance Offering including the newly introduced Safety Score in Texas.\nI also cover the risks and the financial impact Tesla Insurance could have.\nTesla Insurance has a long runway ahead but it won't be an overnight success. Nonetheless, I wouldn't bet against Tesla successfully disrupting and competing within the personal auto insurance market.\n\nRidofranz/iStock via Getty Images\nWhat typically comes to mind when you think of personal auto insurance? For the average consumer, insurance is hard to understand, considered expensive, and somewhat boring.\nWhile that might be true, it doesn't have to be this way. Tesla (TSLA) has introduced Tesla insurance in California and more recently in Texas. With this article, we’ll briefly explore the personal auto insurance landscape, dig deeper into the Tesla personal auto insurance product, and look at what it could mean for Tesla moving forward.\nThe Personal Auto Insurance Landscape\nPersonal auto insurance is a mandatory requirement in all but two states within the U.S (Virginia and New Hampshire). Most insurance carriers price insurance using traditional factors (credit score, age, gender, location, driving and vehicle history, etc.) with the option of enrolling into a Usage-Based Insurance (UBI) program.\nA UBI program helps align your auto policy’s cost with your driving habits. Take a look at Progressive(PGR) or Travelers’ (TRV) programs as examples. Nonetheless, traditional insurers still use the aforementioned traditional factors first and foremost with an optional UBI offering.\nThe personal auto market wrote about $250B in premium in 2020. There is a ton of opportunity for Tesla to generate meaningful revenue over time. However, the current top 10 players accounted for ~75% or 3/4 of the total written premiums in 2020. State Farm had the highest market share at 16.2%, followed by the likes of Berkshire Hathaway or Geico (BRK.A), Progressive, and Allstate (ALL).\n\nLemonade (LMND), Metromile (MILE) (recently acquired by Lemonade), Root (ROOT), and others that are only pricing personal auto insurance on how one drives instead of traditional factors are trying to disrupt this massive industry. Tesla is now trying to do the same.\nTesla’s Personal Auto Insurance Offering\nTesla first introduced personal auto insurance in California in 2019 through State National Insurance. More recently, the company took the next step forward in its insurance journey by offering personal auto insurance in Texas through the underwriting company Redpoint County Mutual Insurance. It's important to note that Tesla isn't an underwriting company, it is partnering with underwriting companies to offer its product under the Tesla Insurance name.\nThe premium is determined based on what vehicle you drive, your provided address, how much you drive, and what coverage you select. The company is not using traditional variables like credit, age, gender, and claim history to price their insurance. With Texas, Tesla also introduced their UBI program called the Safety Score as an additional factor in determining premium.\n\nThe Safety Score is based on driving behavior and assigns the driver a score from 0 to 100 based on five safety factors:\n1. Forward Collision Warnings per 1,000 Miles:Audible and visual alerts provided to the driver in situations where a possible collision could occur due to an object in front of the vehicle. Maintaining a safe distance and paying attention to the traffic around you helps improve your score.\n2. Hard Braking*:Defined as a decrease in the vehicle’s speed larger than 6.7 mph, in one second. Despite the definition, I think we all know what hard braking is. The Safety score can be improved by engaging the brake pedal early when slowing down, coming to a stop, or reacting to a change in the environment.\n3. Aggressive Turning*:Defined as an increase in vehicle’s speed to the left/right greater than 8.9 mph, in one second. Again, we all know aggressive turning when we see it. The Safety Score can be improved by turning, changing lanes, or rounding a corner gradually instead of aggressively.\n4. Unsafe Following*:Tesla vehicles measure their own speed, the speed of the vehicle in front of them and the distance between the two vehicles. Based on these measurements, Tesla calculates Headway, or the number of seconds you would have to react and stop if the vehicle in front of you came to a sudden stop. Unsafe following is the proportion of time where your vehicle’s headway is less than 1.0 seconds relative to the time that your vehicle’s headway is less than 3.0 seconds. Unsafe following is only measured when your vehicle is traveling at least 50 mph. The Safety Score can be improved by not tailgating or driving close to the vehicle in front of you so you have enough time to react.\n5. Forced Autopilot Disengagement:If you remove your hands from the steering wheel during Autopilot, an audio and visual warning is sent to the driver. Three of these warnings result in Autopilot system disengagement for the remainder of a trip.\n*Not factored into the Safety Score formula when on Autopilot\nThese factors are measured directly by the Tesla models using various sensors on the vehicle and Autopilot software. Although this is a significant step forward in Tesla’s insurance journey, The Safety Score isn’t something that’s new.\nMany major U.S personal auto insurers have introduced optional UBI programs that assign a score to the driver. Nonetheless, there are a couple of meaningful items that differentiate Tesla.\n\nSome of the factors introduced by Tesla in Texas are different to what other insurance carriers have. For example, Progressive doesn’t have forward collision warnings or unsafe following as factors. On the other hand, Progressive includes late night driving and driving less overall as factors within their UBI program. Tesla is likely to introduce new factors and tweak existing factors within the Safety Score as more data becomes available.\nUnlike other major carriers, Tesla doesn't require and additional device to be installed in the vehicle to capture driving behavior. Tesla uses specific features within the vehicle to evaluate premium based on actual driving.\nThe Safety Score is updated daily to provide real-time feedback on driving safety. The daily Safety Scores are combined (up to 30 days) to provide a premium based on the months’ driving activity. Below is an example of how the premium could change based on the score by month. Traditional insurance carriers don’t offer daily updates and change in premiums by month. Instead, it’s typical to have a monitoring period of 6 months before receiving a score and change in premium.\n\n\n\nBased on the introduction of the Safety Score and partnership with Repoint Insurance, Tesla Insurance is the cheapest option for full coverage in Texas.\n\n\n\nLastly, and most importantly, the company will be able to leverage first party data to predict collision frequency due to the technology within Tesla cars. Other insurance carriers will likely have to partner with different manufacturers to capture data within cars at the point of sale, Tesla already has first party data.\n\nCFO, Zachary Kirkhorn,explained:\n\n At Tesla, because our cars are connected, because they are essentially computers on wheels, there's enormous amounts of data that we have available to us to be able to assess the attributes of a driver who's operating that car, and whether those attributes correlate with safety.\n\n\n We've been able to go back and analyze that data and we've learned 2 things coming from that. The first is that the probability of collision for a customer using safety score versus not is 30% lower. That's a pretty big difference.\n\n\n It means that the product is working and customers are responding to it. The second thing that we've looked at is what is the probability of collision based upon actual data as a function of a driver safety score. And that is aligning with our models. Most notably, if you're in the top tier of safety compared to lower tiers, there's multiplex difference in probability of collision based upon actual data.\n\nTesla is looking at hundreds of different variables and billions of miles of driving history to predict loss frequency and price each risk individually. The dataset will continue to grow and get better as Tesla sells more cars and as people drive more. Tesla is planning to launch personal auto insurance in every major market in which they have cars.\nRisks to Consider\nSo far it must seem that Tesla is in a great position to capitalize on this new frontier. While that might be true, we also have to consider a couple of important risks:\n\nIt will not be easy to disrupt this massive industry dominated by the top 10 companies. The top 10 and others have a century of insurance acumen have already moved to introduce ever improving UBI programs. Additionally, up and coming insurance pure plays like Lemonade and Root already have or are working to expand on their UBI programs.\nPersonal auto insurance is a complex business with strict regulations by state. It won't be easy to navigate this landscape. Here’s how Elon Musk described it at the Annual Shareholders’ meeting:\n\n\n Tesla insurance. Yes. So, like the degree in which insurance is a regulatory labyrinth is insane. It was like designed to be hard feeling you guys. I don’t know if it’s – but it certainly is very difficult. So, there is a zillion applications, and you have to wait for a bunch of time. And get it’s come long and complicated and a lot of it is state-by-state. Most of it is state-by-state. So, we are just processing applications in states across the country. And then the states also have different regulations. So, you can’t actually – aren’t legally allowed to offer the same insurance in every state. So, you have got to adjust the software to be different every state. It’s basically very complicated.\n\n\nTypically, the unit economics within personal auto insurance have been poor. Even Progressive, one of the best auto insurers on the market, aims for a profit margin of ~6% after accounting for losses and expenses (including claim handling costs). With Tesla’s digital experience, the expenses are likely to be lower than traditional auto insurance sales and service. The loss ratio is much harder to predict despite the Safety Score indicating a 30% lower likelihood of a collision. It begs the question: what type of margins will the company achieve with its insurance offering?\n\nFinancial Impact of Tesla Insurance\nOn the 3Q20 earnings call, Musk noted that Tesla has a goal to hit 20 million in vehicle sales per year by 2030. That's a lofty goal but let's use that as a basis to see what impact Tesla Insurance could have on the financials.\nIf Tesla can sell 20 million vehicles per year by 2030 and the average cost of Tesla Insurance is $1,795 (based on TX results shared earlier), Tesla Insurance would generate ~$36 billion in revenue by 2030 assuming every vehicle chooses Tesla Insurance.\nNobody knows if Tesla will sell 20 million vehicles per year by 2030, what the average cost of Tesla Insurance will look like, or if customers will actually buy Tesla Insurance over other carriers. Nonetheless, it is helpful to look at what could happen. As you can see below, even if Tesla doesn't reach 20M in vehicles sales per year by 2030, it could still generate meaningful revenue from its insurance offering.\nMusk specifically stated on the 3Q20 earnings call that \"insurance could very well be 30%, 40% of the value of the car business, frankly.\"\n\nWith Tesla Insurance, it's easier to derive top line estimates compared to bottom line estimates. Currently, there is no way to tell what the profit margin for Tesla's insurance product will look like, but, we can estimate.\n\nIf we assume a profit margin of 6% (based on Progressive) and the best case scenario of 20M vehicles sold per year by 2030, Tesla will generate ~$2.2B of income. If Tesla Insurance can achieve a higher profit margin, it will make a meaningful contribution to overall profit over time.\nPlease note that the above examples are merely high level projections and won't be accurate in all likelihood. For example, the 20 million vehicle sales per year by 2030 is a global target and Insurance in certain countries outside the U.S is either not required or treated much differently. It will be easier to predict what the financials for Tesla Insurance could look like as the company expands its products into additional states and as we receive more information.\nConclusion\nTesla Insurance has a long runway ahead but it won't be an overnight success. It will likely take significant time to launch the product in different states. The overall share of new car sales that are EVs within the U.S is expected to be 30% by 2030, meaning that adoption will be slow and steady. As the story unfolds, Tesla will have to successfully compete with age-old and up and coming personal auto carriers, navigate through complex state by state regulations, and try to generate meaningful revenue and profit.\nAt this point, I don't know if Tesla will be able to disrupt and compete within the personal auto industry, but time will tell. I know I'll be watching from the sidelines and I wouldn't bet against them!","news_type":1},"isVote":1,"tweetType":1,"viewCount":572,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":7,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/874326298"}
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