Elon Musk’s Tesla launched an insurance offering this week which faced a bumpy road in its first few days, including the website being yanked offline for an “algorithm update.”
Business Insider reports that Tesla vehicles are often more expensive to insure than regular cars, as a result, Tesla has introduced its own insurance product simply called Tesla Insurance. Tesla stated that the program was designed to give customers a discount of as much as 30 percent allegedly made possible by Tesla’s greater understanding of its vehicles safety features and repair costs.
Maryann Keller, the principal at consulting firm MK&A, commented on Tesla Insurance stating: “A very high percentage of Tesla owners have another car, and this insurance will not cover the other car if it’s a brand other than Tesla. In the grand scheme of their overall insurance planning, is this going to be worthwhile?” Currently, it is not possible to insure a Tesla vehicle and a non-Tesla vehicle together on the same Tesla Insurance policy.
But, just hours after the launch of the new system, sales were stopped by the company stating that an “algorithm update” was needed. The official Tesla Twitter account stated in a tweet posted just four hours after the new Tesla Insurance program went live: “We’re making some updates to Tesla Insurance and will be back online shortly.” The firm added: “Algorithm update in progress.”
Algorithm update in progress
— Tesla (@Tesla) August 28, 2019
Daniel Ives, an analyst at Wedbush Securities, told clients in a note: “With the company’s debt load remaining an albatross around Fremont’s neck, strong cash flow and profitability will be needed for the coming years to help fund Musk’s myriad of initiatives (robotaxis, Giga 3, European build out, insurance initiative announced last night, etc.) and appease frustrated investors in the Tesla story.”
Ives continued: “While demand showed an impressive bounce back in the June quarter and the company is seeing good order activity for 3Q (Europe so far so good, US demand remains lumpy in our opinion), we continue to believe that hitting 360k to 400k unit guidance for FY19 will be a very difficult Herculean-like feat.”