Yahoo Finance Warren Buffett Says Tesla Achieving Full Self-Driving Would Be "Good For Society And Bad For Insurance Companies Volume"
Berkshire Hathaway Inc. (NYSE:BRK) had its annual meeting earlier this month, and Warren Buffett continued to share his wealth of knowledge on the company, investing, and modern events. At one point, the legendary investor talked about leading electric vehicle maker Tesla Inc., commenting specifically on their recent pivot to releasing robotaxis and a true fully self-driving technology.
While Tesla isn't the only company that has self-driving software, it is one of the most advanced. But it's still behind several other competitors, with some already rolling out robotaxis in markets across the U.S. Most notably, Alphabet Inc.'s Waymo is actively operating fleets of fully autonomous robotaxis out of San Francisco, Austin, Phoenix, and Los Angeles.
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It's a bit easier for companies like Waymo because they're rolling out taxis specifically for certain markets. There's a defined number of roads in Austin, Texas so Waymo only needs to teach its Austin-based vehicles how to handle those specific roads. Meanwhile, Tesla's self-driving software requires every vehicle to know how to traverse every road, including the hundreds of scenarios that could come up during one's drive.
Tesla has struggled to maintain its sky-high valuation in recent years. Tesla reached a peak of over $407 in late 2021. Since its high, the stock has declined roughly 60% from its highs and continues to drop. This is largely due to declining market share in China, lower sales in the U.S. from higher interest rates, and steeper competition. Musk is now looking to turn things around with a pivot into robotaxis and its full self-driving software, as well as moving away from its supercharging network.
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During the annual meeting, Buffett commented on this recent move, specifically about Berkshire's massive insurance business. Berkshire owns Geico and its own Berkshire Hathaway Insurance company. Insurance is a substantial revenue source for Berkshire Hathaway and a large growth factor for the company.
For 2023, Berkshire's Insurance underwriting earnings rose to $2.598 billion, a 185% increase from $911 million in the year-earlier quarter. Geico’s earnings specifically grew a staggering 174% to $1.928 billion from $703 million a year prior.
Buffett said, "Anything that reduces accidents is going to reduce costs, but that's been harder to do than people have done before. If it really happens, the figures will show it and our data will show it and our prices will come down." Buffett goes on, specifically hinting at skepticism saying, "There's been a lot of people that have talked about doing that in the past." Buffett then mentions Uber as an example, whose insurance firm is now almost bankrupt according to Buffett.
Specifically about Tesla, Buffett says, "If accidents get reduced 50%, it's going to be good for society but It's going to be bad for insurance companies’ volume. But good for society is what we're looking for."
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This article Warren Buffett Says Tesla Achieving Full Self-Driving Would Be "Good For Society And Bad For Insurance Companies Volume" originally appeared on Benzinga.com
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