Author Topic: TSLA - Tesla Motors  (Read 882493 times)

Dalal.Holdings

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Re: TSLA - Tesla Motors
« Reply #3590 on: February 29, 2020, 08:32:16 AM »
A lot of people love themselves a mustang or an F150. Doesn't mean they should go and buy Ford stock.

No one said anything about buying the stock. To repeat,

claims of "commoditization", impending "Tesla killers", and a lack of a moat abound (from others)
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Liberty

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Liberty

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Re: TSLA - Tesla Motors
« Reply #3593 on: March 05, 2020, 05:55:46 AM »
https://www.barrons.com/articles/gm-tesla-batteries-electric-vehicles-400-mile-range-51583346332

Good they're investing, but I've read press releases and seen concept cars at auto shows for over a decade now. Nothing gets my pulse up much anymore until it's a production vehicle that people can buy in large numbers.
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Aberhound

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Re: TSLA - Tesla Motors
« Reply #3594 on: March 07, 2020, 12:53:16 PM »
Good video on the potential of Tesla insurance:
https://youtu.be/Zn58tQJjC5w

Cigarbutt

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Re: TSLA - Tesla Motors
« Reply #3595 on: March 08, 2020, 06:13:51 AM »
Good video on the potential of Tesla insurance:
https://youtu.be/Zn58tQJjC5w
That was interesting and thank you.

The positives:
-The co-selling of the insurance product as an "add-on" could be a marketing tool and a source of profit.
-The safety technology and autonomy aspect will likely change the pattern of accidents and result, on a net basis, in a lower risk profile so the insurance product will need to adapt and Tesla may be well positioned as a first-mover for their cars.
-Perhaps the higher insurance quotes that people were getting (insurance industry can be conservative with new products) was a negative factor for some buyers, so offering the insurance product may help sales in the interim.

The negatives:
-The video is promotional and shows lack of fundamental understanding related to underwriting.
-They seem to imply that, even without the security features and autonomy aspect, that Tesla cars are safer (or is it the drivers?). Why would that be? (around 4:34 in video)
-Even if Tesla is able to individually price better the policies (in theory), in the aggregate, they are unlikely to do better than the industry as a whole once the period of adaptation is over. Also, offering a lower-priced product overall is unlikely to produce larger profits on a large and sustainable scale.
-The auto insurance industry is very good at capturing the essence of risk with very simple procedures. For example, if lower premiums are warranted, they may rapidly find out that most of the refinement may be captured simply by the age group, occupation, zip code or some other socio-economic indicator.
-The video seems to imply that the float harvested from this venture could be reinvested into other ventures. Tesla has a fronting arrangement with an insurer that does not build float as the risk (and the float) is transferred to a third party. Even if Tesla would be the third party, rules and regulations are very strict about where funds can be invested and regulators would be particularly vigilant with a new product.
-It is possible that Tesla becomes an insurance behemoth (car, home etc) but this is a field completely unrelated to car manufacturing. I don't see anything inherently clear as to why Tesla would integrate technology better than the industry as a whole for the underwriting part.

Edit: The eventual addition of recorded technology features raises very difficult questions for issues of privacy and liability (the questioning is already underway).
« Last Edit: March 08, 2020, 06:35:49 AM by Cigarbutt »

A Dhandho Investor

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Re: TSLA - Tesla Motors
« Reply #3596 on: March 08, 2020, 10:18:16 AM »
The whole idea of Tesla insurance being cheaper than other insurers is hilarious.

But I'll put my Tesla bear cap of and reasonableness pants on to elaborate.

Are Tesla drivers a new bread or are these people the same people that drove Audi's, Mercs and beemers before driving Tesla's?
Why does this matter? Because insurance companies have 10's of years of statistics of how prone people are to having accidents.

Since these people are the same people that drove Audi's, Mercs and beemers before driving Tesla's, do you think that once they start driving Tesla's they become safer drivers or less safe drivers? I'm in the camp that they become less safe drivers, not because of the fact that they drive Tesla's, but because of the fact that they started driving a new type of car (an electric one, that at the same time accelerates faster than a regular car). I for example am used to driving a car with a manual gear. I don't think I will start driving more safely changing to an automatic gear, or driving a US car instead of an EU one (sitting on the right hand side of the car). Similarly, I don't think people become more safe drivers driving a Tesla than driving their previous car. These cases of sudden unintended acceleration? If it is not Tesla's fault, than it's the drivers fault..

So now we now that the drivers are probably more prone to having accidents. At the same time, other drivers might become less safe drivers with electric cars around because (1) electric cars are more silent than ICE (2) electric cars accelerate faster than ICE cars.

So we know the reason why electric car drivers need to pay higher insurance premiums than ICE car drivers (for now, because I presume that once people have more experience driving electric cars, the rate of accidents will drop, and hence insurance premiums).

So why is Tesla(s insurance carrier) able to offer lower insurance premiums than other insurers? I don't think it is because Tesla has better information on the accident rate than other insurance companies, but Tesla simply started with this business line because it suits into the narrative of "Tesla's are safe cars".

I believe that the agreement between Tesla and its insurance carrier is as follows:
- Tesla gets a commission from its carrier for every driver that takes on a Tesla insurance (like it is the case in the normal agent/ broker relationship)
- Tesla gets a rebate (bonus) from its carrier in case the actual accident rate (payout to insured Tesla drivers) is below the expected accident rate
- Tesla needs to pay its carrier in case the actual accident rate (payout to insured Tesla drivers) is above the expected accident rate




Cigarbutt

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Re: TSLA - Tesla Motors
« Reply #3597 on: March 08, 2020, 11:15:14 AM »
...
I believe that the agreement between Tesla and its insurance carrier is as follows:
- Tesla gets a commission from its carrier for every driver that takes on a Tesla insurance (like it is the case in the normal agent/ broker relationship)
- Tesla gets a rebate (bonus) from its carrier in case the actual accident rate (payout to insured Tesla drivers) is below the expected accident rate
- Tesla needs to pay its carrier in case the actual accident rate (payout to insured Tesla drivers) is above the expected accident rate
The following is based on various reasonable assumptions and inferences and there could be some kind of risk retention by Tesla but I think that, in this specific case, State National (Markel sub), as a fronting agent which is recognized, licensed and rated acts as a plumbing agent to connect alternative capital providers looking for uncorrelated returns such as primary insurance lines and Tesla which is looking for third-party capital to take over the risk from issuing insurance policies. This is reminiscent of the rise in alternative capital presence in the insurance-linked securities market. The experience may be different but, for the ILS market, the rise in interest for the returns was associated with policies issued too cheaply and things have started to normalize.
If interested, the short video can be instructive (especially starting at 2:12 for the Tesla relevance):
https://www.statenational.com/fronting/fronting-explainer/

ValueArb

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Re: TSLA - Tesla Motors
« Reply #3598 on: March 08, 2020, 01:04:13 PM »
https://www.barrons.com/articles/gm-tesla-batteries-electric-vehicles-400-mile-range-51583346332

GM has killed Tesla so many times it's like a road-runner cartoon. I'm going to stick to my "no car companies" rule for a while longer.
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ERICOPOLY

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Re: TSLA - Tesla Motors
« Reply #3599 on: March 08, 2020, 04:22:30 PM »
https://www.barrons.com/articles/gm-tesla-batteries-electric-vehicles-400-mile-range-51583346332

I'm not impressed by GM:  400 mile of range with a 200 kWh battery and the car isn't even in production.

Compare that to the 390 miles of range that Tesla currently gets on production Model S with a 100 kWh battery, a battery of only 1/2 the size of GM's.

Tesla's upcoming Roadster has a range of 620 miles, and the largest Cybertruck configuration will be 500 miles.