It Just Keeps Getting Worse For Tesla
Insurance reports unveil major problems at Tesla.
Tesla’s nosedive is already historic. Sure, its stock price might be steadily recovering, but that’s only because of investor anticipation for the Cybercab launch, which, even by Tesla’s own internal analysis, is going to be a complete disaster (read more here). So, expect it to nosedive again soon. Meanwhile, Tesla sales worldwide are crashing, and Musk’s reputation is growing worse by the day as his actions at DOGE and public revelations about his drug use begin to reveal his true colours from underneath the mask. Surely it can’t get any worse for Tesla? Well, it can, and it will. It turns out that Tesla’s own insurance products are losing money, and the reasons why are devastating.
Why does Tesla have its own insurance branch?
Back in the day, Teslas were among the most expensive cars to insure of their kind. They were more expensive and complex in comparison to their combustion rivals and often more powerful. As such, insurance companies assumed repair bills and write-off rates would be higher and that crashes would be more likely, so they hiked the insurance premiums for Teslas. At the time Tesla claimed that insurers didn’t understand their cars, the technology behind them, or how to repair them, which was causing them to overcharge. But, because Tesla themselves did understand, they could offer an insurance product significantly cheaper than what was available, which they launched in 2019. However, as always with Musk, it was a hollow promise, and their premiums aren’t actually any cheaper than those offered by other companies.
Recently, a new report has revealed that Tesla Insurance is highly unsustainable. This report found that it has a payout rate of 92.5%; in other words, for every dollar it takes in premiums, it has to pay out 92.5 cents in claims. When also considering the overheads, Tesla will be losing money hand over fist by insuring their own cars.
That alone is bad news, especially when Tesla itself is now unprofitable, thanks to its sales collapse. However, the causes of this — namely, gigacasting, crash rate, and FSD — are even more devastating.
Let’s start with gigacasting. Most car companies build their chassis by welding together panels that have been stamped out of sheet metal. This has been the standard for decades. Tesla attempted to innovate in this area with gigacasting. This is where giant complex parts of the aluminium chassis are cast in one turn using massive, incredibly high-pressure dies. This is much more expensive to set up than the welding method, but thanks to its speed and simplicity of use, it is significantly cheaper on a per-part basis. In fact, gigacasting was one of the main ways Tesla was able to bring production costs down, not, as many people think, because of their battery innovations.
Still, there is a reason the rest of the industry hasn’t adopted gigacasting as fervently as Tesla. Cast parts are much more fragile and susceptible to sudden fracturing than any other form of metal forming. If a small, accessible part of the chassis is gigacast, that isn’t an issue, as replacing it is relatively easy. This is how every other automaker has used the technology. However, in a Tesla, the front and rear underbody sections are a single gigacast part. These structures connect the suspension, crumple zones, motors, battery and cabin together. This not only means that they take a tremendous amount of force during even minor crashes but also means if they crack, the entire car needs to be effectively disassembled to replace them! This is why hitting a lamppost while parking a Tesla is enough to write the vehicle off.
And here’s the real kicker: Tesla’s gigacasting push isn’t actually saving them any money. EVs that don’t use gigacasting (or at least, not to the same extent as Tesla), such as the Kia EV3, Volvo EX30 and VW I.D. 4, all now cost the same or less than their Tesla rivals, while offering similar or better ranges, charge speeds, and even acceleration. So, Tesla made their cars stupidly fragile and incredibly hard to repair and, in turn, got no measurable gain…
This alone would make Teslas eye-wateringly expensive to insure and severely damage what’s left of their brand reputation. However, Teslas also crash way more often than any other brand of vehicle.
A new report found that Tesla was, yet again, the most crashed car brand in the US, posting 26.67 accidents per 1,000 drivers during 2024. That is roughly 30% higher than the rate among companies like Honda, Toyota, and Ford. So, why such a high rate? Well, the study highlighted two key factors: Tesla’s rapid acceleration and the behaviour of its drivers. Tesla drivers have a very high rate of speeding and DUIs. Combine this with a car that accelerates like a sports car but lacks the handling prowess or grip of one, and it’s no surprise they crash at such high rates.
What is interesting is that this report didn’t cite Tesla’s FSD (Full Self-Driving) as a cause, likely because their data didn’t enable them to discern whether FSD caused an accident. Even if it did, they still likely couldn’t fully attribute crashes to FSD, as proven by Mark Robber — the system is programmed to turn itself off seconds before a crash, enabling Tesla to claim FSD wasn’t “operating” during the crash. It’s almost like they are trying to hide something…
However, even with this shady practice, Tesla’s own self-driving data suggest that supervised FSD, where the driver is expected to oversee the system, is roughly ten times deadlier than the average US driver (read more here). In short, the data suggests that FSD is highly dangerous and is causing significantly more crashes than we are aware of, meaning Tesla itself could be directly blamed for its increased accident rate.
Okay, so Teslas are designed in such a way that makes them unreasonably fragile and unfeasible to repair; their driver base is far more reckless than others; the cars have too much power and don’t handle well, making them easier to crash; and the “self-driving” system crashes so often it really should be called a self-crashing system. No wonder Tesla insurance is bleeding money; it’s almost likely Teslas were engineered with the express purpose of being uninsurable.
This information only applies fuel to the trash fire that is Tesla. Reports like this can not only damage a brand’s reputation beyond all hope of repair but also create a chain reaction of class action lawsuits and federal investigations, and Tesla is facing multiple of both. After all, many people have lost loved ones or are left substantially out of pocket because of the factors that make Teslas so unprofitable to insure. Once more skeletons like this fall out of Musk’s and Tesla’s closets, the chances of Tesla being able to rectify its death spiral become slimmer and slimmer.
Thanks for reading! Don’t forget to check out my YouTube channel for more from me, or Subscribe to join my monthly film club. Oh, and don’t forget to hit the share button below to get the word out!
Sources: Electrek, Forbes, Lendingtree, Will Lockett, KBB, Will Lockett, Electrek
The Ketamine Kid gave Trump almost $300 million for the election. There may be Iawsuits, but we shouldn't count on federal investigations until 2029, at the earliest. OTOH, all that money won't count for squat if Musk does something to piss off the Man With the World's Thinnest Skin.
I live out in the back of beyond in rural Kansas, and my neighbor down the street just bought a Tesla. She must plan on doing nothing but local driving, because she kept her Chevy Tahoe and there are no charging stations anywhere local (she had a plug put in her house).