Tesla is shaking up the traditional insurance industry with its innovative approach to vehicle insurance while forcing the industry to provide better rates for Teslas. The company's insurance arm also provides valuable information that Tesla is using to improve its products.
Tesla Insurance reported an annual premium run rate of $300 million as of the end of last year and growth of 20 percent a quarter. It's quickly becoming a significant player in the market. Tesla Insurance is now available in 12 states, with an average of 17% of customers using a Tesla Insurance product, which continues to rise. But there are several ripple effects Tesla creates as it disrupts another industry.
How Tesla Insurance is Different
As a refresher, Tesla insurance uses the driver's safety score to provide the premium. So basically, drive aggressively with that Model S Plaid and pay a higher premium. This is a significant improvement from the old fashion way the industry charges premiums, a formula that takes the driver's age and sex and the car's make, model and year to spit out a magic number to pay.
Tesla Forced the Competition to Respond
While Tesla has a fairer approach to the system, it's also shown other benefits. The motivation behind starting the Tesla Insurance business was to reduce the total cost of ownership for Tesla vehicles, which saw high premiums from third-party insurance companies. The company's priority remains to keep costs low and make insurance affordable for customers while maintaining a healthy bottom line. As the company continues to grow its insurance business, it is challenging the established insurance providers and forcing them to re-evaluate their pricing and offerings.
During the fourth quarter earnings call, Elon Musk said, "So it has a bigger effect than you think because it improves total cost, or insurance costs, even when they don't use Tesla Insurance, because now the other guys of the world have to compete with Tesla and cannot charge outrageous insurance for Teslas. So, it's great."
Helps Tesla Reduce Repair Costs
Tesla uses data collected from its insurance company to minimize the cost of repairing a Tesla after a collision. This collection of data and feedback has allowed Tesla to adjust the design of the car and the software to minimize repair costs while still maintaining its advanced safety features. Tesla is also working to improve its spare parts logistics, which can significantly impact repair times and costs.
The improvements made through this feedback loop are not limited to new cars but also apply to older vehicles, helping to reduce the total cost of ownership for all Tesla owners. In this way, Tesla is providing its customers with insurance options that better meet their needs and revolutionizing the entire automotive insurance industry.
Tesla's innovative approach to insurance has not only created a new standard in the industry but also has had a positive impact on its car designs. In addition, Tesla's use of insurance information is a prime example of how technology and data can be leveraged to enhance the product and customer experience.
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Your Tesla is packed with features designed to improve your comfort and safety, and Cabin Overheat Protection (COP) is a prime example. While all the materials and equipment in your car are built to withstand the summer heat, this feature prevents the interior from reaching excessively high temperatures when parked.
But what does it do, how does it work, and when should you really use it? Let’s dive in.
What is Cabin Overheat Protection?
Cabin Overheat Protection is a climate control feature that activates automatically after you’ve left your vehicle. Its primary goal is to keep the interior cabin temperature from soaring on hot days, and helping to keep the surfaces humans touch most often - like the seats, steering wheel, and screen- at a more manageable temperature.
You can also use Cabin Overheat Protection to protect temperature-sensitive items from excessive temperatures; however, its primary goal is to prevent the cabin from becoming excessively hot.
For moderate durations, Cabin Overheat Protection can actually reduce the amount of energy spent cooling your vehicle, as it’s more efficient to maintain a temperature rather than letting cooling it down from 130ºF. However, it most cases, Cabin Overheat Protection will use additional energy.
It is important to note what Cabin Overheat Protection is not. It isn’t designed to protect people or pets. For that, you’ll want to use Tesla’s dedicated “Dog Mode” or “Keep Climate On” features, which offer more robust control over the internal temperature. You can read a comparison of the major climate features here.
Enable Cabin Overheat Protection
Tesla offers several options for cabin overheat protection, allowing you to choose when and how it operates. You can enable it in your vehicle or through the Tesla app:
In the Vehicle: Navigate to Controls > Safety > Cabin Overheat Protection.
Via the Tesla App: Go to the Climate, swipe up, and toggle Cabin Overheat Protection.
Cabin Overheat Protection Settings
When enabling COP, you can pick from three settings:
Off: The system is completely disabled and will not activate when the vehicle is parked. This is the default option.
No A/C: If the interior temperature exceeds your set threshold (see below), your vehicle will only use the HVAC fan to circulate outside air through the cabin. This helps cool the vehicle since outside air is often cooler than the inside, which can easily reach 130ºF or higher. This is our recommended setting, as it helps prevent the cabin from getting too hot in most situations and uses minimal energy.
On: If the interior temperature exceeds your set threshold, the system will use both the fan and the air conditioning to actively cool the cabin down to and maintain it below that threshold. This is the most effective cooling option, but it also uses a significant amount of energy.
You can also set a Temperature Threshold for activating Cabin Overheat Protection. Tesla provides three options: 90°F (30°C), 95°F (35°C), or 100°F (40°C). Cabin Overheat Protection will attempt to maintain your vehicle at the threshold while it is active.
Battery Drain
The main reason you might choose to leave Cabin Overheat Protection off is its energy impact, which will not only increase your costs but also reduce your vehicle’s range. Ultimately, this feature keeps your vehicle’s HVAC system—or at least its fans—running to help cool the cabin.
While the No A/C mode consumes minimal energy, the On mode (which uses air conditioning) will noticeably drain the battery, particularly on hot days when the system works harder to maintain the set temperature.
The amount of energy COP uses will vary greatly based on your selected activation temperature, the exterior temperature, and whether your vehicle is parked in the sun. However, in general, the energy impact will be minimal if COP is set to No A/C, and significant if it’s set to On.
As a reminder, Cabin Overheat Protection will automatically shut off after 12 hours of operation or if the vehicle’s state of charge falls below 20%. COP and several other Tesla features will increase the cost of using your vehicle. We recently reviewed all Tesla features that continue to use power while your vehicle is parked.
Is Cabin Overheat Protection Necessary?
This is a common question, and the answer is no, Cabin Overheat Protection is not essential. Tesla vehicles, including their interior components, are designed and tested to withstand the typical automotive temperature cycles, including both hot and cold. While keeping the cabin cooler could potentially provide some marginal benefit in preventing the leather or other surfaces from degrading, the primary purpose is for the comfort of the occupants when they return.
What About Extreme Cold?
We’ve talked about heat, but what about extreme cold? Cabin Overheat Protection, as the name implies, deals with heat and will not prevent your vehicle from getting too cold. For cold weather, your Tesla has different mechanisms.
Your vehicle will automatically use energy to keep its high-voltage battery within a safe temperature range in extreme cold, whether or not you’re in the car. This helps protect the battery’s health and ensures you’ll have a minimal level of performance even if you enter the vehicle without preconditioning.
For optimal comfort in cold weather, preconditioning your vehicle will warm up the cabin and battery for improved performance.
Cabin Overheat Protection is a valuable feature that improves the comfort of your Tesla, particularly during hot weather. However, it’s not designed to improve the lifespan of your vehicle's interior, and it should not be used for people or pets (use Keep Climate or Dog Mode for those situations).
If you're parked in extreme heat and have sensitive items in the car, this could be an ideal use case. Use Keep Climate if you need to keep the items below 80°F, or Cabin Overheat Protection if you’re just looking to protect them from excessive temperatures.
Tesla’s recent focus on expanding and vertically integrating its battery production is beginning to take global steps, starting with a battery recycling and service center in South Australia. In Marion, a suburb of Adelaide, the council recently voted in favor of a proposal that would see contaminated public land developed and leased to Tesla.
The move promises local jobs and environmental remediation but has garnered a lot of public debate focused on Elon’s moves outside his role as CEO.
The proposal involves a site that’s currently unusable for recreation due to chemical contamination. A local developer plans to acquire and remediate the land, constructing a new facility specifically for Tesla. This site would reportedly serve two purposes: recycling old lithium-ion batteries and serving as a Tesla Service Center.
Tesla’s Commitment to Recycling
Tesla recently announced its intention to ramp up its battery recycling and repurposing efforts. During the Q1 2025 Earnings Call, Tesla’s executives highlighted substantial progress. Tesla had recycled enough materials in Q1 2025 to build approximately 21,000 Model Y RWD vehicles, representing a 136% year-over-year increase from Q1 2024.
Dedicated regional hubs like this one would be a logical next step in expanding the recycling loop and furthering Tesla’s vertical integration while also reducing its reliance on new materials. In addition, local sources also mentioned that Tesla could be repurposing older lithium-ion batteries for other purposes, including their inclusion in stationary battery storage systems like Powerwall or Megapack.
Of course, the facility also has major benefits for the local community, including creating around 100 local jobs, as well as injecting approximately $56 million into the local economy. Further, developing the contaminated land as a renewable facility is one of the safest ways to use the land that’s been sealed off from the public for nearly a decade.
Elon’s Image
The proposal isn’t without its critics. Local opposition was voiced during community consultations, with most of the negative sentiment directed towards Elon rather than the facility itself. Despite these complaints, the local council elected to proceed, arguing that tangible economic and environmental benefits far outweigh any perceived geopolitical or symbolic harm that shutting down the project could cause.
With the council’s endorsement on record, the proposal now moves to the South Australian state government for approvals regarding the change in land classification.
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