Insurance: Tesla makes a masterful gamble in China

On July 30, 2024, Tesla registered an insurance brokerage in China. If successful, it will be a jackpot!

Is there a hint of paranoia or evidence of Chinese protectionism against Tesla that would lead the American manufacturer to establish its own insurance brokerage? In short, Tesla will now offer insurance in China when you buy or lease a car from them.

Without saying it outright, Tesla suspects that Chinese insurers have instructions to impose very high insurance premiums on its vehicles. The response from traditional insurers is that electric vehicles — and Tesla in particular — are very costly to repair in case of a breakdown or accident.

On July 30, 2024, Tesla therefore registered, in the Beijing district, an insurance brokerage in China according to the national business database. The process still needs to be approved by the Chinese administration, which can obviously deny it. Tesla is proceeding cautiously with a registered capital of 50 million yuan, or 6.4 million euros.

Serious Economic Crisis in China

One of Tesla’s goals would also be to circumvent insurers’ vetoes against insuring too many Teslas in their portfolios, to reduce exposure to risk. An economic and real estate crisis is brewing in China, and customers are now required to present perfect profiles to be considered creditworthy.

China, Tesla’s second-largest market, continues to support the American automaker despite ongoing tensions with the United States over technological rivalry. However, Tesla has no choice: its cash resources seem to allow it to take the risk of becoming its own insurer. The American manufacturer has control over labor in its factories, the cost of parts, and vast data on their reliability.

If permission is granted for Tesla to become its own insurance broker — it is already acting as a bank with 0% interest rates — then it would be an unprecedented financial masterstroke in automotive history.

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