Following BYD, Tesla is entering the auto insurance business again. Can electric car insurance premiums drop significantly as a result?

Tesla's main business is automobiles, energy storage and carbon credits. But Musk feels that this is not enough, and he has set his sights on another "gold mine" in automobiles - auto insurance.

On July 30, Tesla established an insurance brokerage company in China called "Tesla Insurance Brokers (China) Co., Ltd." with a registered capital of 50 million yuan. The legal representative and chairman are both Zhu Xiaotong.

Tesla has been wanting to do auto insurance for a long time. As early as August 2020, Tesla registered and established an insurance brokerage company in China. The legal representative at that time was also Zhu Xiaotong. On September 8, 2023, the legal representative was changed to Wang Hao, and the company was cancelled in 2024.

But less than four months after the cancellation, Tesla entered the auto insurance business again, and once again handed it over to Zhu Xiaotong to take charge. Zhu Xiaotong is a veteran contributor to Tesla, the president of Tesla China, and one of Tesla's four top executives. This time Tesla entered the auto insurance industry again, and Zhu Xiaotong personally took charge, the importance of which is self-evident.

Generally speaking, regulators in various countries are very strict about insurance licenses. In the United States, it is extremely difficult to obtain an insurance license. In China, in the past six years, regulators have only approved the establishment of two professional insurance intermediaries - BMW (China) Insurance Brokers Co., Ltd. and ERGO Insurance Brokers Co., Ltd.

Tesla wanted to engage in insurance brokerage business in 2020, but it still did not obtain an insurance brokerage license four years later and the company was forced to cancel its registration. However, it should be noted that Tesla’s relationship with the Chinese government is now closer than before, and it may be smoother than before in obtaining a license.

Tesla has persisted for several years and appointed a heavyweight like Zhu Xiaotong to take charge of the insurance business, which shows its persistence. In fact, it is not just Tesla, many mainstream new energy vehicle manufacturers are also considering car insurance.

In May this year, BYD announced that it had acquired 100% of the shares of Yian Property & Casualty Insurance, marking BYD's official acquisition of a property insurance license. At the same time, BYD also added auto insurance business to the company and officially changed its name to BYD Property & Casualty Insurance. On May 13, BYD Property & Casualty Insurance issued its first auto insurance policy for a Dolphin car with a total premium of 3,900 yuan.

In addition to BYD, Xiaopeng Motors established an insurance agency in 2018, and Ideal Auto acquired an insurance brokerage license in 2022 by acquiring Yinjian Insurance Brokerage Co., Ltd. In addition, Geely, SAIC, GAC, FAW, Dongfeng and other manufacturers have also established or invested in property insurance companies and insurance intermediaries.

Why are car manufacturers so interested in car insurance?

First of all, it’s because of “money”. According to estimates by domestic authoritative institutions, by 2025, the scale of domestic new energy vehicle insurance premiums will reach 154.3 billion yuan, accounting for 15.7% of the total auto insurance premiums; by 2030, the scale of new energy vehicle insurance premiums will reach 1.3 trillion yuan, accounting for 31.3% of the total auto insurance premiums.

This is like the "penetration rate" in the automobile market. The insurance industry also has a penetration rate. Currently, the big cake of auto insurance is basically controlled by traditional insurance companies, and the automakers themselves cannot make a profit. But in the new energy era, automakers do not want to give up such a trillion-level market.

The auto insurance market has existed since the era of fuel vehicles. Why did manufacturers only start to target it in the new energy era? The reason is simple: in the new energy era, automakers have big data in their hands.

To understand this logic, we must first understand how car insurance works today.

The commercial insurance we currently purchase often has this situation: even if our car has not had an accident for several years, we still have to pay insurance. Everyone's car usage environment and driving habits are different. Insurance companies do not have this data, so it is impossible to accurately calculate the probability of accidents for each person. Therefore, the car insurance we pay now is actually an "estimated" average level.

This is obviously "distorted" and unfair to consumers because it makes car owners with high and low accident rates pay almost the same price. Even if there is a difference, it is often small.

In the new energy era, this extensive approach is likely to be changed. Because with the user's permission, the on-board intelligent system can accurately grasp the vehicle's driving conditions and the owner's driving habits, evaluate the vehicle's safety factor and accident probability based on big data, and then use this as a basis to determine the insurance price of each vehicle.

As early as 2021, Musk proposed the concept of "UBI auto insurance", which is auto insurance based on users' real-time driving behavior. Based on big data, manufacturers can provide more personalized insurance services and even achieve "one thousand cars, one thousand insurances".

If you have a car but don't use it very often, then if an insurance agency launches an insurance policy that sets the price based on frequency of use, and you don't have to pay when you don't use the car, it will definitely be very popular.

Traditional insurance companies cannot provide such insurance products because they do not know the daily use of vehicles. However, new energy vehicle manufacturers have a large amount of user driving behavior data in their hands, so they can develop some personalized auto insurance products in a targeted manner. If such a day really comes, the existing auto insurance industry will be completely subverted.

It can be said that new energy vehicle manufacturers have inherent advantages in directly engaging in auto insurance. In the new energy era, whoever masters big data can create miracles. The basis for high-level intelligent driving and new auto insurance is big data.

In addition, there is another benefit for new energy manufacturers to provide auto insurance, which is to tie insurance to sales and make it a selling point.

Currently popular insurance is also tied to the sale of new cars, but car owners have always been disgusted by this kind of binding; if new energy vehicle manufacturers engage in auto insurance, they can enhance the attractiveness of their models by adjusting insurance prices and providing some personalized, targeted insurance products, turning insurance from a bundled product that consumers "have to buy" into a benefit.

As of now, BYD is leading the field and has a clear leading advantage, because it has obtained a property insurance license, while Tesla, Xiaopeng, BMW and other manufacturers have only obtained a "broker" license. In addition, BYD's huge sales volume is also a gold mine, which can help BYD's property insurance get on the right track quickly.

Although other manufacturers do not have licenses, they can cooperate with insurance companies in the capacity of insurance brokers and use the big data in their hands to allow them to launch insurance products that are more in line with users' actual car usage habits.

Of course, new energy vehicle manufacturers will also encounter various difficulties in providing auto insurance. In terms of operating experience and customer maintenance, new energy vehicle manufacturers have no advantages over traditional insurance companies. But in the long run, new energy vehicle manufacturers providing insurance themselves may become a new trend.

The continuous development of new energy vehicles will inevitably bring some new things. Car companies doing insurance is just one of them. If Tesla, BYD and other manufacturers can really lead this trend and change the current auto insurance industry landscape, it can be regarded as another contribution they have made to China's new energy vehicle industry in addition to "selling cars".

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.