Tesla Finance increased net operating lease vehicle originations to $3.13 billion for the full year 2016 up from $1.79 billion in 2015 — a 74% increase — the company reported in its fourth quarter earnings report.
The report did not disclose the number of vehicles leased in the year or the quarter as previous filings have, nor total outstandings, delinquencies or net charge-offs. Auto Finance News has reached out to the company for further clarification.
However, Tesla, Inc. has been “quietly” implementing an all-in-one car pricing model that wraps the car payment, insurance, and maintenance into one lump sum, said Jon McNeill, head of global sales and service, during the manufacture and financial services provider’s earnings call.
Tesla’s autopilot features make it safer on a per-mile basis than other cars on the road, which makes the insurance calculation different from traditional vehicles, an analyst at Morgan Stanley & Co. pointed out on the call. Tesla Chief Executive Elon Musk has even predicted his cars could be as much as 90% safer than other vehicles, per mile in the medium term.
This led Tesla to start offering third-party insurance products directly in stores, especially in their Chinese sales, McNeill explained.
“We’ve been doing it quietly, but — in Asia in particular, where we started this — now the majority of Tesla cars are sold with an insurance product that is customized to Tesla,” McNeill said. “It takes into account not only this autopilot safety features, but also the maintenance cost of the car. So, it’s our vision in the future that we’ll be able to offer a single price for the car, maintenance, and insurance, in a really compelling offering for the consumer.”
Currently, insurance providers have been working with Tesla to provide customized rates for the vehicle based on its relative risk and maintenance requirements. However, if that were to end, Musk said the company would consider offering insurance in-house.
“This is not to the exclusion of insurance providers, but I mean, if we find that insurance providers are not matching the insurance proportionate to the rest of the car then, if we need to, we will in-source it,” Musk said. “But I think we’ll find that insurance providers do adjust the insurance costs proportionate to the risk of a Tesla.”
The company’s multiple insurance providers were not disclosed on the call.