The rapid development of connected car services has enabled automakers to offer a variety of products, including telematics insurance.

Tesla is among the pioneers in this area, with its Tesla Insurance service being available in 12 US states as of November 2022. But besides offering drivers insurance rates that accurately reflect their driving habits and reward safe driving behavior, Tesla Insurance is proving useful to the company in other ways.

During Tesla's Q4 2022 and full-year earnings call yesterday (via Teslarati), CEO Elon Musk shed some light on how the automaker gains valuable insurance feedback that helps it minimize the cost of repair for its vehicles.

"It is also giving us a good feedback loop into minimizing the cost of repair of Teslas – for all Teslas worldwide – because we obviously want to minimize the cost of repairing a Tesla if it's in a collision… And previously, we didn't actually have good insight into that because the other insurance companies would cover the cost. And actually, the costs in some cases were unreasonably high."

Gallery: Tesla Service

As a matter of fact, data collected through Tesla Insurance proved so useful for the company that they led to the company implementing changes to the design and software of its vehicles. Furthermore, the insurance program provided Tesla with valuable insights on how it could improve its parts and service to reduce repair costs, Musk explained.

He added that most accidents involving Teslas are actually small, "like a broken fender or scratched side of the car," adding that the company is working on how to get cars repaired very quickly and efficiently using input from Tesla Insurance.

"It's remarkable how small changes in the design of the bumper and improving the logistics of spare parts or providing spare parts needed for collision repair have an enormous effect on the repair cost… So, this has actually a very significant effect on the total cost of ownership and customer happiness."

Tesla Insurance was also referenced during the earnings call when investors asked Tesla CFO Zachary Kirkhorn when the program would become big enough to warrant details in the company's financial reports. The executive noted that it's probably going to take some time before it grows to the point where it needs disclosures.

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