- Tesla took its new insurance offering offline Wednesday just hours after launch.
- The company tweeted that it was performing an “algorithm update” and that the products would be back shortly.
- Some potential customers online said they were quoted prices higher than their current third-party plans.
- Visit Business Insider’s homepage for more stories.
Tesla paused sales of its insurance plans just hours after the product’s launch on Wednesday, citing an “algorithm update.”
“We’re making some updates to Tesla Insurance and will be back online shortly,” the company’s official twitter account said shortly before 7 p.m. eastern time, less than four hours after a blog post announcing the offering in California was published.
“Algorithm update in progress,” the company added. It’s not clear when the plans may go on sale again.
Algorithm update in progress
— Tesla (@Tesla) August 28, 2019
The move came after some customers said online that they were quoted rates that were higher than their current third-party insurance plans, despite Tesla’s pitch of 20% lower rates. The plans were only available in California.
“Because Tesla knows its vehicles best, Tesla Insurance is able to leverage the advanced technology, safety, and serviceability of our cars to provide insurance at a lower cost,” the company said in the blog post announcing the product, which was originally slated for a May launch.
“This pricing reflects the benefits of Tesla’s active safety and advanced driver assistance features that come standard on all new Tesla vehicles.”
CEO Elon Musk, who was in China for an artificial intelligence conference, did not tweet about the insurance launch or its subsequent delay.
Shares of Tesla were set to open higher by about 1.6% on Thursday morning.
Wall Street analysts say the move is yet another of Musk’s promises that could strain the company’s balance sheet and high debt.
“With the company’s debt load remaining an albatross around Fremont’s neck, strong cash flow and profitability will be needed for the coming years to help fund Musk’s myriad of initiatives (robotaxis, Giga 3, European build out, insurance initiative announced last night, etc.) and appease frustrated investors in the Tesla story,” Daniel Ives, an analyst at Wedbush Securities, told clients in a note.
“While demand showed an impressive bounce back in the June quarter and the company is seeing good order activity for 3Q (Europe so far so good, US demand remains lumpy in our opinion), we continue to believe that hitting 360k to 400k unit guidance for FY19 will be a very difficult Herculean-like feat.”
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