Home News Elon Musk’s insurance plans could be a difference-maker for Tesla’s brand

Elon Musk’s insurance plans could be a difference-maker for Tesla’s brand

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Throughout Tesla’s first-quarter earnings call, Elon Musk noted that the company would be supplying ” because of its vehicles to a insurance product that was “ persuasive. Musk even supplied an estimated timeframe for its service’s launch, stating that Tesla’s insurance would be rolled out within a month.

While the concept of an in-house insurance plan may look like an unnecessary distraction for the electric vehicle maker at this point, the service could very well become a crucial factor in Tesla’s pursuit of sustained profitability. This is according to Eddie Yoon, a director at The Cambridge Group, a firm that specializes in growth plan. According to Yoon, a well-rounded insurance plan could help make Tesla into one of the industry’s most powerful brands.

In an article on the Harvard Business Review, Yoon notes that companies which become multi-billion-dollar mega-brands generally meet several critical success factors. The first of these involves choosing the right adjacency to enter. Since breaching an untried market is hard, companies that succeed generally go for an adjacency which has a similar go-to-market model, or at least one where a powerful partner could be leveraged. Tesla appears to be doing the latter by partnering with Markel to provide insurance to its clients.

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The first adjacency must also have economics which could be measured, among other things, by the way that the company core business could be improved by it. This is pertinent for Tesla, since the company’s vehicles are generally cheaper to operate than an internal combustion automobile. If Tesla can decrease the purchase price of its vehicles’ insurance the company could make the idea of owning an electric car more appealing and practical to a broader spectrum of customers.

Coupled with Tesla’s optimizations from the production of its vehicles, a reasonable insurance program could lead to more electric car sales for the company. This, of course, gives Tesla a chance at becoming profitable in the long term.

If Tesla proves successful in rolling out its auto insurance agency , the company could potentially expand the program to other regions of its business. Tesla is now intending to ramp its Energy business, with Elon Musk dubbing 2019 as the “Year of the Solar Roof and Powerwall. ” Musk has also hinted in a “Tesla smart house ” previously. Maybe these products could pave the way for a Tesla home insurance plan? Such a possibility isn’t too farfetched.

These ideas and initiatives could seem radical in light of Tesla’s industry today, but Yoon noted that additional mega-brands are adopting similar strategies. Gerber baby foods, for instance, made $900 million in life insurance premiums. That’s equivalent to about 75 percent of its baby food industry that is core during the year. With this in mind, it appears that Elon Musk’s idea for Tesla’s insurance agency not be farfetched at all.

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