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Could Tesla actually be making their vehicles less expensive to fix?

by | Feb 2, 2023

It doesn’t often seem like automakers have a lot of incentive to make their vehicles simpler, faster or less expensive to repair. Automakers, being capitalist enterprises, naturally prioritize profit over pretty much all else.

But, there can be ways in which the after-sale needs of consumers and car companies meet, as Elon Musk explained in Tesla’s recent Q4 2022 earnings call.

During the meeting someone asked Tesla’s CFO about the growth of Tesla Insurance, the company’s captive insurance service available to owners in certain states. He explained that the intention of the service – presumably in addition to, you know, making money – is to “improve the total cost of ownership of our cars, given that we’re seeing high premiums of insurance from third-party companies.”

Musk then weighed in saying there are side benefits of operating their own insurer, one of which is incentivizing Tesla itself to modify its vehicle designs so it can lower its own costs.

“So we’ve actually adjusted the design of the car and made changes in the software of the car to minimize the cost of repair,” he said, and later elaborated, saying “it’s remarkable how small changes in design of the bumper and improving … providing spare parts needed for collision repair have an enormous effect on the repair cost. So, if you’re waiting for a part to get repaired and that part takes a month, now you’ve got a month of having to rent another car. It’s extremely expensive. And of course, you’re missing the car that you love and the one you actually want to drive. So this has actually a very significant effect on total cost of ownership and customer happiness.”

To which every mechanic and car owner in the world just responded with, “Duh.” This would certainly be welcome news, especially because just getting Tesla parts has been really tough. Musk didn’t get into more specifics about when we can expect to see any of these changes. Hopefully we’re not waiting as long as we have been for the Cybertruck, which Musk also mentioned on the call isn’t going to hit volume production until next year.

Reuters then picked up the story and went on to highlight how many low-mileage Teslas are totaled on the Copart and IAA auction websites, presumably because an insurance company deemed the repair cost excessive. You can read more about their analysis here, and many other news publications picked up on that story. However, it doesn’t provide much explanation about how Tesla vehicles compare to other makes in terms of being totaled at low mileage. They cite how many Tesla Model Ys are on those sites, but it’s not clear if those are relatively high numbers, whether in relation to all vehicles, or luxury vehicles, or EVs. We’d like to see a bit deeper analysis before we draw the conclusion that Tesla vehicles in particular are more likely to get written off than similar vehicles.

That said, we looked around on the auction sites as well and found some interesting examples. Below, for instance, are images from the IAA site of a 2022 Tesla Model Y Long Range in Georgia that has fewer than 10,000 miles, with rear collision damage, and an estimated repair cost of $50,000. Does this look totaled to you?

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