Tesla has begun offering insurance discounts to drivers who regularly engage the company’s “Full-Self Driving (Supervised)” (FSD) driver assistance feature. The discounts are currently offered only in Texas and Arizona.
Some Tesla Drivers Have Tesla Insurance
Tesla is unique among automakers in operating its own insurance company.
Traditional insurance companies sometimes write off even lightly damaged Teslas because of a design philosophy unique to the company.
Most automakers build a car’s frame out of hundreds of separate parts. Tesla uses as few as three huge cast pieces. That simplifies building cars and makes them particularly stable. But it means that even minor damage can require replacing a large portion of a vehicle.
Related: Toyota To Explore Tesla Production Method
That can lead traditional insurance companies to charge higher rates to insure Tesla products. In response, the company launched its own insurance company to offer lower-cost insurance to owners (though an insurance pool made entirely of Teslas may make it challenging for the company to fund the effort).
Use FSD 50% of the Time to Qualify
Tesla insurance customers can now qualify for a discount of up to 10% if they use the company’s FSD system.
FSD is the most advanced and expensive of Tesla’s three driver assistance systems. It can steer, accelerate, and brake a car on highways and city streets, provided that a human driver stays poised to correct its potential mistakes.
Related: Self-Driving Cars—Everything You Need to Know
On its website, Tesla now advertises, “The more you drive with FSD (Supervised) enabled, the bigger the discount is on your insurance premium for certain coverages on your Tesla Insurance policy. You can earn up to a 10% discount on those coverages when you drive 50% or more of your miles with FSD (Supervised) enabled.”
Why Tesla Is Doing This
The move is likely an attempt to get drivers to engage with the FSD system more so that Tesla can gather data to improve it.
Tesla has gradually moved away from car sales as its primary profit driver. CEO Elon Musk now describes the company as an automation company, not a car company. Its next planned major product launch is not a car Americans can buy, but a robotaxi that Tesla will operate. In calls with investors, Musk has stressed that Tesla could make money licensing its FSD software to other automakers.
Most other automakers, however, have their own rival projects to create similar products. Some have outpaced Tesla. Mercedes-Benz now sells the only system that legally allows the driver to look away from the road (see our Lyn Woodward test it here). Consumer Reports testing has found that most rival systems outperform Tesla’s.
InsideEVs explains, “There’s just one major, existential problem with this pitch: Its lone AI product is ‘Full Self-Driving,’ and thus far regulators and even many consumers don’t think it can deliver. So now, to help increase Tesla’s take rate on FSD, it’s offering insurance discounts to those who use it.”
The company tracks FSD use closely, using data gathered from drivers to train its software. In theory, the more Tesla owners use FSD, the faster Tesla can improve it.
Won’t Pay for Itself
The discount could save money for drivers who already own a Tesla equipped with FSD.
We should caution, however, that FSD currently costs $8,000 up front or $99 a month. A 10% discount on monthly insurance is unlikely to ever pay for that.
