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Elon Musk: Tesla will offer 'compelling' insurance product within a month

Javier E. David
Editor focused on markets and the economy

Tesla is weeks away from offering insurance on its vehicles, CEO Elon Musk told investors and analysts on a conference call, moving to help its lease holders save money on high premiums.

After reporting a first quarter share loss that was far worse than Wall Street’s estimates, Musk stated that the company is planning to create an “insurance product” that will launch in a month.

“It will be much more compelling than anything out there,” Musk said, without elaborating further.

Tesla vehicles, while environmentally friendly, are among the most expensive luxury cars to insure, and insurance quotes are known to vary widely among models.

“Part of the explanation is simple – cars that cost more can also cost more to insure,” Tesla says on its website, in a reference to the vehicle’s reputation for quality and safety.

“Logically if an insurer has to pay out if you total your car, the more expensive your car the more they have to pay,” the company added. Analysts at Needham said that the plan was “a response to the relatively high costs certain insurance companies have been charging Tesla owners."

Yet the parameters of Tesla’s plan, and how much it could conceivably cost drivers, was not immediately clear.

Tesla CEO Elon Musk jokingly motions to kick before introducing the Model Y at Tesla's design studio Thursday, March 14, 2019, in Hawthorne, Calif. The Model Y may be Tesla's most important product yet as it attempts to expand into the mainstream and generate enough cash to repay massive debts that threaten to topple the Palo Alto, Calif., company. (AP Photo/Jae C. Hong)

According to the initial reaction from some observers, a Tesla insurance plan could, in theory, help owners save money in the long run.

On Thursday, analysts at Canaccord wrote that “while we await further details, we view anything that lowers the consumer’s cost of ownership as a clear benefit for demand."

Volvo recently announced it was offering consumers a subscription plan with insurance built in, at a monthly all-inclusive cost of $750. Similar to a cellphone plan, customers “subscribe” to a car for two years while making fixed monthly payments.

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