Insurance companies aren’t sure about all this new, driver safety assistance tech, some consumer advocacy groups are mad at Tesla, BMW’s got batteries on the brain and more await you in this The Morning Shift of Friday, July 26, 2019.
1st Gear: A Changing Landscape
Many new cars today can come optioned with a suite of advanced driver assistance systems (ADAS), like 360-degree cameras, automatic braking, lane-keeping and adaptive cruise control. It’s just the way of the future. These features are very attractive to buyers and they are designed to make driving safer.
But insurance companies, which base their entire profit systems on accidents and collisions, could see these systems start affecting premiums, according to Reuters. From the story:
Personal auto insurance, while traditionally a low-margin business, provides the largest amount of liquidity to insurers, generating more than $244 billion in 2018 direct premiums in the United States alone, data by the National Association of Insurance Commissioners showed. Motor insurance is also seen as a way for insurance companies to cross-sell other, more lucrative products to customers.
According to Swiss Re AG, the world’s largest auto reinsurer, and mapping company HERE, ADAS has the potential to reduce motor accident frequencies by up to 25%, cutting global insurance premiums for fully ADAS-equipped cars by $20 billion by 2020.
Insurance companies here in the U.S., however, say they don’t have “sufficient data” to “validate auto industry promises of safety benefits from automated driving systems.”
Which means that even though you might have ADAS on your car, you probably won’t be getting a premium discount anytime soon. Insurance companies claim a lack of OEM data about the measured safety of their features, inconsistent standards, unpredictable consumer use and costlier repair bills as variables.
That bit about sky-high repair bills is especially true. Since most sensors are located in a car’s bumpers and windshield, they are no longer cheap fixes and can range in the thousands after a simple chip or fender bender.
Allstate and Westfield Insurance both agreed:
“We’re not going to go against the data and create any type of false discounts for the purposes of marketing at this point. We just want to make sure the rate is reflective of the risk that it brings,” said Steve Armstrong, a vice president of Allstate Corp’s pricing department, one of America’s largest insurers.
“We’re stuck in a murky in-between,” said Jennifer St. John, national auto claims leader at Westfield Insurance. “ADAS have shown to provide real world benefits, but there really isn’t a great deal of commonality in terms of what’s out there.”
But maybe as more of these features become standard, insurance companies will be forced to reconsider the safety of cars. I still don’t think there will be a change in all our premiums, though. What, you think car insurance is going to get cheaper? I want to live in the world you’re living in.
2nd Gear: Investigate Autopilot, Please: Consumer Groups
Here are the players involved: The Center for Auto Safety and Consumer Watchdog (both consumer advocacy groups), the Federal Trade Commission, some state attorneys and Tesla. And it’s about, you guessed it, Autopilot.
Yesterday, the two advocacy groups put out a statement, renewing their call to the FTC and the Attorneys General of California, New York, Florida, Michigan, Utah and Massachusetts to investigate the “dangerously misleading and deceptive practices and representations of Tesla Motors” over the “safety and capabilities of its Autopilot feature.”
Center for Auto Safety and Consumer Watchdog warned that Tesla’s representations of its Autopilot feature continue to violate Section 5 of the FTC Act, as well as similar state statutes, because they are materially deceptive and are likely to mislead consumers into reasonably believing that their vehicles have self-driving or autonomous capabilities. The letters state that Tesla’s and Elon Musk’s public statements regarding Autopilot mislead and deceive consumers.
I’ll just say it again because I guess it needs to be said. Autopilot is not a self-driving function. It’s a very advanced driver assistance feature. When you turn it on, you are not excused from paying attention to the road and you are not supposed to remove your hands from the wheel.
We do not have self-driving cars yet. People need to stop acting like we do.
3rd Gear: More Batteries
With more and more electric cars and hybrids hitting the road, the supply of batteries must keep up. BMW has plans to increase its battery production, according to Automotive News Europe.
It’s a $10 million investment at the automaker’s Spartanburg plant in South Carolina that will hopefully double the production capacity for lithium ion battery packs. The new batteries will be used for the PHEV versions of the X5 and the upcoming X3, according to the outlet.
This is all part of BMW’s plan to launch 25 electrified cars (half of which will be EVs) by 2023.
If they’re anything like the wonderful i8, then I’m for it.
4th Gear: China Car Sales Still Don’t Look Great
As the world’s biggest market for cars, it seemed like nearly all automakers turned their attention to China. Last year, though, Chinese car sales slumped for the first time in two decades and it doesn’t look like it’s rebounding anytime soon.
China’s Association of Automobile Manufacturers, the country’s largest auto industry association, predicts car sales to fall fiver percent year-on-year to 26.7 million cars this year, according to Reuters. From the story:
That compares with its previous forecast for zero growth and last year’s decline of 2.8%. Sales of new energy vehicles are still expected to increase, but at a slower pace to 1.5 million, down from previous forecast of 1.6 million, CAAM said.
The more pessimistic forecasts come after a spate of downgrades by industry experts and criticism that the fast-tracking of new emissions rules in China have been poorly managed, hitting sales.
Also, the ongoing trade war hasn’t done anyone any favors. It apparently affected consumer confidence.
We’re heading to a recession kids. Buckle up.
5th Gear: A Revamped Car You Probably Forgot About
The Cadillac XT5 has been revamped for 2020. Please try and hold your applause until the end of the presentation.
Here are a smattering of the updates, as found on the company press release:
- Standard LED headlights
- Updated lower front- and rear-facia
- Higher resolution interior display
- Rear pedestrian alert
- Standard heated front seats
- The 2.0-liter, four-cylinder turbo now the standard engine
Don’t all go out and buy one at once, now.
Reverse: Tragedy in Michigan
Neutral: Do You Think Car Insurance Will Become Obsolete?
Let’s play a fun and totally hypothetical game. Say we’ve finally achieved fully autonomous cars. Vehicle-to-vehicle and vehicle-to-infrastructure communication and all that. Nobody drives anywhere ever again, it’s all automated. Will there be a need for accident insurance anymore?
Sure, you’ll need it for if a tree falls on your car, but if all cars are autonomous and “talking” to each other, wouldn’t that virtually eliminate accidental collisions? Thus rendering accident insurance obsolete?