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Elon Musk stated at the Q4 and FY 2022 earnings call that information from Tesla Insurance is assisting the company in reducing the cost of car repairs, however it appears that things are different for Teslas that are insured by other insurance companies. According to a recent story, insurance firms are already writing off Tesla vehicles, even those with minimal miles.
In the most recent earnings call, Elon Musk discussed Tesla’s attempts to reduce the cost of repairing its vehicles. “In order to reduce the cost of repair, we actually changed the car’s design and software… Therefore, it is providing us with this excellent feedback before we once again reduce costs,” Musk stated.
The scenario is different outside of Tesla Insurance’s coverage, at least based on a Reuters study. Many “totaled” Model Y machines placed for auction in December and January, according to data from Copart and IAA, two of the biggest salvage auction houses in the US, had less than 10,000 miles on their odometers. Given that these cars were purchased before Tesla slashed its prices earlier this month, their sticker prices ranged from roughly $60,000 to over $80,000.
When the expense of restoring a car is assessed to be too great, insurance companies typically consider the vehicle a total loss. It’s interesting to note that 14 of the 15 Model Y Long Range vehicles manufactured by Giga Texas that were included in the publication’s study and reported as total losses from June to November had less than 10,000 miles on the clock.
These include a 2022 Model Y Long Range manufactured by Giga Texas, which was listed by IAA in early January with front collision damage. The car’s selling price was $61,388 and the estimated cost of repairs was $50,388. Another Model Y with side accident damage was posted for sale at $72,667 with a $43,814 estimated repair cost.
According to Reuters’ study, a number of well-known insurance firms, including State Farm, Geico, Progressive, and Farmers, have deemed low-mileage damaged Teslas to be too expensive to fix.
It is not surprising that some insurance firms are choosing to write off the damaged Teslas as total losses given the estimates for the repair of damaged Teslas. However, it is challenging to establish that such a tactic is inefficient. The extension of Tesla’s insurance business seems to be the appropriate course of action at this time. This will spare its owners from having to deal with insurance companies that don’t seem to comprehend their cars very well.
This was said by Elon Musk last week at the fourth quarter and full year 2022 earnings call, when he discussed how Tesla Insurance is providing the business with an excellent feedback loop on how to reduce the costs of repairing its vehicles.
Because we obviously want to reduce the cost of fixing a Tesla if it is in an accident, it is also giving us a good feedback loop into decreasing the cost of repair of Teslas — for all Teslas worldwide… And because the other insurance companies would cover the expense in the past, we didn’t actually have a solid understanding of that. In fact, some of the costs were excessive, according to Musk.