Tesla's new safety rating might help offset insurance costs
Owning a new Tesla might just become more cost-effective for consumers with a recent top safety rating for the automaker perhaps leading to a drop in insurance premiums.
The Insurance Institute of Highway Safety (IIHS) has given the Tesla Model 3 a "Top Safety Pick +" rating on Thursday. In their announcement, the IIHS noted that the Tesla Model 3 “earns good ratings across the board for crashworthiness” and specifically noted a superior rating for its standard front crash prevention system. It is Tesla’s first-ever safety award and two years removed from a ho-hum "acceptable" rating given for their 2017 model.
This is welcome news for Tesla, who has had some struggles keeping insurance rates for drivers down. In large part due to high expenses for fixing and maintaining the vehicle, Tesla’s insurance has cost consumers as much as ensuring a luxury car.
The high rating from the IIHS should calm some of those fears. In an effort to combat high insurance rates, Tesla unveiled its own insurance company in late August. First offered in California, there are plans to expand into other states.
But is it enough to help push Tesla mainstream?
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 320.72 | +9.54 | +3.07% |
Gabe Hoffman, founder of Accipiter Capital Management and someone who has been critical of Tesla and CEO Elon Musk, doesn’t think the safety rating will move the meter all that much for the company. Of the safety rating, Hoffman said: “I’m not sure it really matters in light of the substantial quality issues that they have.” Tesla has noted logistical and service issues throughout its production history.
“The ownership compared to a normal car is completely miserable. You’re talking about insurance costs that are about 70 percent higher than an [Internal Combustion Engine] car of the same price,” Hoffman told FOX Business. “You have to wait a tremendous amount of time for repairs and spare parts. Plus you have quality issues that are so much more important.”
The safety rating news was tweeted by both Tesla and Musk on Thursday morning.
The buzz about the safety report is a welcome U-turn for Tesla. The IIHS rating for the Model 3 comes just weeks after claims from the National Highway Traffic Safety Administration that Tesla had mischaracterized and exaggerated crash-test results.
CLICK HERE TO READ MORE ON FOX BUSINESS
The rating partners with good news for economy drivers wanting to wade into the market for electric cars. The Model 3 is the most affordable offering from the company, a fact made easier on the wallet by what will likely be slightly lower insurance premiums for drivers.