Tesla's Robotaxi network pilot is slated to launch in Austin in just a few weeks with Model Y vehicles running FSD Unsupervised. However, beyond the technological hurdles of implementing FSD, there’s a crucial question.
How Will Driverless Vehicles Be Insured
Will there be an insurer that steps up to cover Tesla’s taxi network, or will Tesla be on its own? The question becomes even more complicated once customers add their vehicles to Tesla’s Robotaxi network and start receiving and using FSD Unsupervised themselves.
Robotaxi Insurance
Actuarial science (the math behind insurance rates) requires vast amounts of data, and there is little data on autonomous fleets today. However, Waymo, Google's self-driving car division, has already launched in several markets and is insured by a third-party insurance company, so there is some history.
However, it wouldn’t be surprising if Tesla decided to insure their own fleet. While Tesla Insurance has relied on third-party insurance behind the scenes, Tesla recently started underwriting their own insurance earlier this year.
FSD Unsupervised to Include Insurance?
The fundamental difference between FSD Supervised and FSD Unsupervised lies in responsibility. With today’s FSD Supervised, the liability lies with the driver - they must remain attentive and legally responsible for the vehicle’s actions at all times. On the other hand, with Unsupervised FSD, they may not necessarily have to, as the vehicle is handling the entire driving task without needing human oversight or intervention.
Today’s insurance policies would argue that the owner of the vehicle is entirely liable for what happens with their vehicle. They also typically don’t allow ride-hailing services and will likely not permit autonomous use when FSD Unsupervised finally starts rolling out.
Tesla will likely need to offer insurance to drivers while their vehicles are driving on FSD Unsupervised. This could be through Tesla Insurance or some future means that they haven’t disclosed yet, but Tesla’s venture into insurance is starting to make a lot more sense now with robotaxis.
Tesla could include the cost of insurance for FSD Unsupervised right into the FSD subscription fee. If traditional insurance companies aren’t willing to take on the additional liability, then Tesla will likely have to. This would increase the cost of FSD Unsupervised, which would now include insurance.
Tesla Insurance is currently limited to just a few states, which would limit Tesla’s expansion of FSD Unsupervised. It seems that Tesla Insurance would need to expand quickly, or traditional insurance companies would need to start offering insurance for customer vehicles operating autonomously. Given how slow traditional companies move compared to Tesla, this could become an issue, as Tesla needs to get their insurance product approved on a state-by-state basis.
Insurance is a complicated issue that could slow down the expansion of autonomy for customer-owned vehicles, but it’s only one of the many hurdles Tesla needs to solve on its way to offering FSD Unsupervised.
Whichever path Tesla takes could be one that will define the rest of the Robotaxi industry.
