Tesla Crash – Repair or Electric Scrap

According to CEO Elon Musk, Tesla is making design and software changes to its vehicles to reduce repair costs and insurance premiums. During Tesla's Q4 earnings call, Musk stated that premiums from third parties are "in some cases unreasonably high" and that the electric car manufacturer's insurance division is putting pressure on these providers by offering Tesla owners lower rates.

"It is remarkable how small changes to the design of the bumper (and) the provision of replacement parts needed to repair an accident have a huge impact on repair costs," said Musk. "Most accidents are actually minor - a broken fender or a scratched side of the car."

The data on wrecked Teslas with low mileage that appear at auctions provide, according to a Reuters analysis, a slightly different and previously unpublished picture.

Wrecked Teslas are auctioned off

Of the more than 120 Model Ys that were totaled after collisions and then auctioned off in December and early January, the vast majority had less than 16,000 kilometers on the odometer, according to online data from Copart and IAA, the two largest salvage auction houses in the United States. The sale prices of these vehicles ranged from approximately €55,000 to over €74,000.

Copart and IAA's auction listings note whether the vehicles were involved in front, rear, or side collisions, and they typically include photos of the vehicles after the crash. However, the listings do not provide detailed information about the type of damage sustained.

Insurance companies generally consider a vehicle a "total loss," meaning they scrap it and compensate the owner if the estimated repair costs are too high. In some cases, the Copart listings included the names of insurance companies that had bought back damaged vehicles and then offered them for auction. However, the insurance companies contacted by Reuters declined to comment.

Tesla's own insurance with special conditions

In August 2019, Tesla founded its own insurance company and promises rates that are up to 30 percent lower than those of the competition. Tesla’s Chief Financial Officer Zachary Kirkhorn stated that Tesla Insurance was generating premiums of $300 million per year by the end of the year and was growing by 20 percent quarterly – "faster than the growth of our vehicle business."