Is Tesla Insurance Losing Money? New Report Says Business Not Sustainable

Tesla Inc TSLA offers insurance for its vehicle owners in a select number of states, a move that could offset higher costs from traditional insurance companies on their electric vehicles.

A new report says Tesla might be losing money on its insurance division.

What Happened: With the highly anticipated launch of robotaxis in Texas next month, Tesla is in the spotlight and investors are eager for the next growth catalysts.

One of the company's lesser-known divisions outside its core electric vehicle business is its insurance arm, which, according to a recent report, may not serve as a significant growth driver.

In fact, according to data from the S&P, the insurance unit could actually be a negative catalyst.

The data, shared by Electrek, shows that Tesla Insurance had a loss ratio of 92.5% in 2023. This means that the company paid out 92.5 cents in claims for every $1 it got from customers in premiums.

While this would represent a typical profit, the figure does not include overhead costs for Tesla, items like employee salaries, rent and other costs.

When put together, Tesla Insurance is likely losing money according to the report.

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Why It's Important: Tesla has stood behind its vehicles for years and offered insurance that it says is cheaper than other insurance companies.

The electric vehicle giant uses real-time driving data to calculate safety scores, which are used to decide driver premiums. Autopilot and full self-driving (FSD) can also impact premiums.

The report comes at a challenging time, following an April study that suggested Tesla owners could face rising insurance premiums amid a spike in vandalism targeting the company's vehicles.

That study, from Insurify, found Tesla insurance rates were climbing at more than twice the pace of the national average between February 2024 and February 2025—suggesting the actual increase could be even higher now.

If the data in S&P's report is accurate, Tesla may need to decide whether to operate its insurance division at a loss, break even by raising customer prices, or turn a profit by increasing premiums even further.

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