Question

In: Economics

Does Tesla’s insurance program keep customers in the “ecosystem” and make them more likely to buy...

Does Tesla’s insurance program keep customers in the “ecosystem” and make them more likely to buy products from the brand in the future? Explain why.

Solutions

Expert Solution

The new insurance policy of Tesla will take customers into the ecosystem and their decision to provide lower cost insurance to the customers will potentially make them more to buy products from the brand in future.

The Tesla motors CEO Elon Musk is stepping into the insurance business as an attempted to accomplish what the company has struggled from past

The Company claims that they will begin offering insurance very soon that taps internal data from auto-pilot driver assist to reduce rates.
The product would "be much more compelling than anything else out there." Musk said on the quarter earnings call of Tesla.

The experts are also agreeing with that, the company can provide lower price because the auto pilot system will decrease the rate of collision claims.

By providing lower insurance rate to their new product they can take the customers into the ecosystem and they can make their unique selling point in the market.

Before stepping into this new insurance business the Tesla's models were among the top vehicles to insure in the U.S. Obviously this change will make them more familiar with customers and make them more likely to buy their products in the future.


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