Tesla Needs You To Use Full Self-Driving So Badly It's Offering Insurance Discounts

Tesla's entire future rides on FSD subscriptions. One carrot: money back on your insurance for using it.

Tesla Model 3 FSD 12.5

Photo by: Out Of Spec Renew

Mack Hogan

By: Mack Hogan

Updated: Feb 3, 2025 at 4:25pm ET

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Tesla Insurance now offers up to a 10% discount for users in Texas and Arizona who use Full Self-Driving.
To get the full discount, owners have to drive 50% or more of their miles with FSD engaged.
That doesn't mean Tesla Insurance will automatically be the cheapest option, though, so shop around.

Tesla has bet the farm on its efforts to turn the absolutely-not-self-driving "Full Self-Driving" software suite into a real, marketable autonomous system. Investors have largely bought this narrative, and seem to agree with CEO Elon Musk that Tesla is no longer a car company. It's an AI company, he says.

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.

Tesla Insurance—the company's wholly owned insurance provider—now offers a discount for certain customers who use Tesla's "Full Self-Driving" feature, the company announced on its website. The new program was spotted by Tesla-focused X influencer Sawyer Merritt and discussed on the Cybertruck forum.

Right now, the program is only available in Texas and Arizona. If you live in those states and use Tesla insurance, though, you can get up to 10% off your premium. The catch is you need to have the Full Self-Driving option on your Tesla. That means you'll have to pay $8,000 upfront or $99 a month to be eligible for the discount. That means it's probably not a good idea to get FSD purely for the discount, as you may never claw that money back.

If you do have it, though, you'll get a discount that increases based on what proportion of driving you do with FSD enabled. The more miles you do with FSD relative to those you drive unassisted, the bigger the discount. Tesla does not say how it scales, but says that the maximum 10% discount requires you to drive 50% or more of your miles with FSD enabled. That's a big ask for a system that has plenty of trouble deciphering some common driving situations, like roundabouts and even one-way roads.

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Tesla and Musk have long argued that FSD is safer than human driving on its own. However, Tesla has cherry-picked data and refused to share the comprehensive data that would allow experts to validate the claim. Musk has also frequently claimed it was safer on a per-mile basis back when it only was designed to work on freeways, themselves far better for mileage-per-accident stats than urban areas. But this move seems to be Tesla Insurance putting its money where its mouth is, providing a direct incentive to get people to use FSD.

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If it was done by any other insurer, this could be a signal that using FSD does reduce the risk of accidents. But given that it's Tesla's own insurance arm, we can't rule out the marketing and narrative incentives for doing this. Giving a relatively small discount for extremely high usage of the company's most hyped and most important technology makes a good deal of business sense.

I also wouldn't assume that this makes Tesla Insurance the best option for you, even if you drive with FSD enabled for most of your miles. Anecdotally, I've seen many forum posts and individuals complaining that Tesla Insurance is far pricier than other firms. Plus, they note that their cars will automatically report any aggressive driving, leading to drastically higher rates. We've also seen reporting from Reuters along with other customer complaints that dealing with Tesla Insurance's customer service can be harrowing. That's true for other insurers, to be sure, so do some research yourself and make an informed decision.

And as always, please remember that despite the name, FSD is not a self-driving system. You remain responsible for the car whenever it is active, and it requires constant, vigilant supervision. If you're willing to handle that—and have FSD already, have or want Tesla Insurance and live in Arizona or Texas—there could be some money in it for you. More importantly for Tesla, the discount program could help introduce people to the technology and persuade them to use it in situations where they otherwise wouldn't.

Experts doubt that Tesla can ever deliver full autonomy with its current suite of sensors, but the company has never been more motivated. Sales were down last year worldwide, and its share of the EV market is contracting rapidly. Tesla profits are also down, the Cybertruck hype is already fading and we still haven't seen the affordable models we keep hearing about. The only big bright spot for shareholders—Tesla's true customer base—is that Musk says "unsupervised" FSD ride-sharing will launch in June.

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So Tesla needs data. It needs people excited. And it needs people actively using the system. Perhaps a 10% discount can move the needle in that direction.

Contact the author: Mack.Hogan@insideevs.com.

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