Thread by @Coyoteblog

1/ I want to expand on my earlier post about Tesla's idea to go into auto insurance. I am copying @elonmusk because my guess is he did exactly 0 minutes of research into insurance regulations before the call. @TeslaCharts @Polixenes13 @markbspiegel $tslaq

https://twitter.com/Coyoteblog/status/1121260340434522113

2/ Insurance is a highly regulated market and is regulated mainly at the state level. To sell car insurance in all of the US would require 50 state approvals. But let's assume $tslaq initially focusses on CA where about half their cars have been sold

3/ Below is CA's checklist for approval of a new auto insurance product in that state. It is 9 pages long. And that is just for the product itself, I believe there is a separate approval process for the company itself (its finances, controls, etc)

insurance.ca.gov/0250-insurers/…

4/ The thought of Tesla successful navigating a highly regulated industry when they can't get their monroney stickers or vin number plates right is hilarious. Tesla is in the bottom decile of publicly traded companies in terms of its internal controls

5/ I will confess that I am not an expert and I would love to hear from someone who has had to do this, but my reading of the process is that CA is not just going to accept Tesla setting rates and doing their underwriting based on driver data it can track in the car

6/ (though of course like other Tesla claims vis a vis autopilot, it's not clear they can actually capture anything useful, but assume for now they can). I am a free marketer so I would love it if the world allowed this kind of freewheeling product innovation, but it does not

7/ Insurance regulation allows a company only very limited degrees of freedom. For example, in CA how a good driver discount is offered is carefully specified by California Code, Insurance Code - INS § 1861.025
codes.findlaw.com/ca/insurance-c…

8/ There is a set basis for underwriting good driver discounts and it does not include spyware in cars. "A person is qualified to purchase a Good Driver Discount policy if he or she meets all of the following criteria:" Period. That is the way you have to calculate it

9/ Again, I am not a fan of this sort of regulation -- in fact, I have been exiting my business from CA due to this sort of micromanagement by the state -- but these are the facts of life. And as far as insurance is concerned, most states are equally detailed

10/ There is no possible way that Musk could say what he said in the call today about insurance if he had spent even 5 minutes researching it or made a call to one expert (something he is unlikely to do as he seems to believe he is the expert in everything)

11/ As I said, I am not an insurance expert, but I am better that having written this and your having read it, that you and I now know more about it than does Musk.

$tslaq @teslacharts @boriquagato

12/ If I were an owner of this company, I would be shocked my CEO made such uninformed and half-*ssed commitments on an analyst call. I would be furious that he did so when the company is facing existential problems in its core business