Tesla's homegrown insurance venture, once touted as a smarter way to cover its cars, is facing serious headwinds — and it's the drivers who may end up footing the bill.
For years, Tesla Insurance promised lower costs by leaning into what the company claimed was a unique advantage: real-time driving data and deep familiarity with its own cars. But a new report suggests those ambitions may be unraveling.
With insurance costs for Tesla owners already being high, this latest development could make electric vehicle ownership even less affordable for everyday consumers.
What's happening?
According to new data from S&P Global, Tesla Insurance reported a loss ratio of 92.5% in 2023, meaning the company paid out 92.5 cents in claims for every dollar it brought in through premiums. Once overhead costs are added, that number suggests Tesla is likely losing money on its insurance program.
In 2019, Tesla began to roll out its insurance products in select U.S. states to help bring down notoriously high premiums for its vehicles. The company leaned on its tech-heavy features, like Autopilot and real-time Safety Scores, to personalize rates. Still, Tesla owners have mixed reviews, with some struggling to secure better quotes than they'd get elsewhere.
This latest report contradicts Tesla's repeated claims that its vehicles are less likely to crash and cheaper to repair. If that were the case, its insurance program would be thriving, not floundering.
Why is this concerning?
If Tesla Insurance continues to underperform, it could lead to higher premiums or more limited coverage options for drivers. It's not just frustrating; it could also make switching to an EV more difficult for people already weighing cost concerns, which also has broader consequences.
A slowdown in EV adoption, particularly among more budget-conscious consumers, risks slowing down our shift away from gas-powered cars, which produce pollution that contributes to the overheating of our planet.
This isn't the first sign of turbulence for Tesla. The company's 2025 sales have seen a slump, including a 62% drop in new registrations in the U.K. and the recalls linked to its Autopilot software. Together, these stories paint a picture of a company under increasing pressure to maintain its once-dominant position in the EV space.
What's being done about it?
To keep EV adoption on track, several policies and tools are helping to offset the cost of going electric. Federal tax credits, including up to $7,500 for new EVs and $4,000 for used models, can reduce the upfront cost of buying electric. Some states also offer additional rebates or incentives.
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If you're shopping for insurance on an electric car, be sure to compare quotes across providers and check whether features like real-time tracking or usage-based pricing will actually benefit you. As EV tech evolves, informed choices can help you save money and stay on the road to a cleaner future.
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