You Can Save Cash With Utilization-Based mostly Auto Insurance coverage — However Ought to You?

Peggy Coleman switched to usage-based auto insurance from Allstate. But in return your VW … [+] Bug has been bugged.

Peggy Coleman

When Peggy Coleman’s insurance agent told her about a new way to save money on auto insurance, she knew she had to try it. The solution Allstate called Milewise allowed her to pay only for the insurance she used, thanks to an emerging technology called vehicle telematics.

But there was a catch: Coleman agreed to install it a small device in the onboard diagnostic connection of your 2015 VW Beetle to qualify for the discount. It would track your mileage, speed, time of day and certain driving events like sudden braking.

“The cost of auto insurance was significantly lower with Milewise compared to a standard policy,” said Coleman, a sales director based in Tucson, Arizona.

before Miles at a time, she paid $ 1,750 a year to insure her car. The program – and driving them carefully – lowered that rate to $ 1,056 per year, a savings of 49%.

Sometimes the savings are automatic. At registration COUNTRY finances With the new DriverIQ program, a telematics tool that uses your smartphone, you get a 10% discount for every vehicle for which you are listed as a driver in the policy. Driving behavior, tracked and reported by the company DriverIQ dashboard, gives you an additional discount of between 1% and 25% for every six-month contract renewal.

“The data monitored by the app’s smartphone sensors – which is only shared privately between the customer and COUNTRY Financial – includes acceleration, braking, cornering, phone distraction while driving and overspeeding,” notes Felipe Teixeira, Director of National Auto Product at COUNTRY Financial.

The Allstate Milewise device.

Allstate

Why everyone is talking about usage-based car insurance

Usage-based car insurance is hot. With more Americans taking road trips rather than flying during the pandemic, they are paying more attention than ever to auto insurance. (The main question: what happens when you go on a long trip? Fortunately, pay-per-mile programs are limited so you don’t end up with a huge bill.)

In one LexisNexis usage-based insurance study, nearly 9 in 10 drivers (88%) said they prefer car insurance prices based on their actual driving habits. In addition, another 71% of drivers said they believe telematics, including driving behavior data, is one of the fairest ways to price insurance when they see an advantage.

“There is widespread consumer interest in participation in usage-based insurance programs, and the growing number of connected vehicles is fueling that interest,” said Adam Hudson, vice president, Connected Car, LexisNexis Risk Solutions.

But how does vehicle telematics work and what does “Pay as you go” mean? What happens when an insurance company looks over your shoulder at the wheel? It turned out that this new technology can bring benefits to both the driver and the environment. But as with any new technology, there is a cost to using it.

What are telematics and pay-as-you-go insurance?

Allstate’s program is part of a new breed of insurance programs that use vehicle telematics to create pay-as-you-go insurance policies. they include Progressive snapshot, State Farm Drive Safe and Save and Nationwide SmartRide. On average, consumers can save between 5% and 50% on insurance with pay-as-you-go insurance.

The ideas behind these programs are enticingly simple: what if you could only pay for the insurance that you use? What if an insurance company could lower your premiums by verifying your good driving behavior in real time?

“Telematics revolutionized the auto insurance industry by providing insurers with real-time, personalized information about their customers,” said Stan Caldwell, Executive Director of Institute for Transport21 at Carnegie Mellon University. He says insurers can now assess risk based on a driver’s actual behavior rather than the demographic and geographic averages of many drivers.

“Customers who actually drive fewer kilometers and drive more safely than the average driver can save money,” he adds.

“Big Brother” questions

So how did it feel to have a bug in Coleman’s bug?

“At first I was concerned – like Big Brother is following you,” she says.

But after switching to Milewise, she saw Allstate gathering and using her data through the website. She could see that it was tracking her speed, whether she was stopping quickly, and whether she was driving after 11pm. She could also see her vehicle health summary on the website, including engine warnings, pending recalls, and location.

After seeing how the program works, she says the benefits outweigh the privacy concerns.

“Besides,” she adds, “our phones are tracking us anyway.”

Allstate says transparency helped allay the privacy concerns of customers like Coleman. The smartphone app provides the driver with information about his car and his driving habits, which is helpful to him – and which he is generally happy to share with an insurance company. The company also says it will never share personal information without the customer’s consent.

In states where Milewise and its Drivewise safe driving program are available, nearly 40% of its new customers sign up for connected plans. That’s double what the company saw at the start of the pandemic.

“More and more people are beginning to understand what telematics is and how it can benefit them,” said David MacInnis, Allstate vice president of Telematics and Usage-Based Insurance. “This is especially important now that driving habits have changed for so many people during the pandemic.”

The advantages of telematics explained

Insurance companies are not promoting usage-based insurance programs that rely on vehicle telematics as a one-size-fits-all solution, said Mary Boyd, CEO of Plymouth Rock Assurance.

“The real advantage of telematics and usage-based driving is the reduction in demands for safe drivers and the associated costs,” she says.

Boyd says that before telematics, drivers had a “set and forget” mentality. In other words, people pay for their insurance and never think about it. But now that your insurance company can reward you for the way you drive, it has become a hands-on experience. And they can even turn the whole process into a game, a process called gamification.

“In telematics, for example, there’s a gamification aspect that gives drivers the ability to strive for the best in order to get rewards like discounted premiums or monetary rewards,” she adds. For example, Plymouth Rock’s telematics program allows users to select a family sharing option. Not only does it allow parents, teenagers, and young drivers to monitor, but it also lets up to 10 family members compete for streaks, badges, and a spot on the top driver leaderboard.

Now there is a video game that all parents can support.

Of course, telematics and pay-per-mile programs are not for everyone. If you’ve had a couple of accidents – or have a reputation as a lead-footed driver – you might not want your insurance company to look over your shoulder. And if privacy is important to you (you carry a blackphone and refuse to use Google) then these programs are definitely not for you.

The economics behind pay-per-mile programs

Experts say pay-per-mile auto insurance has the potential to do more than just help individual drivers. You can help the drivers as a group.

“With more traditional auto insurance policies, safe drivers and low-mileage drivers subsidize mile-long and dangerous drivers to a certain extent because insurance companies ignore this important information,” said Cody Nehiba, assistant professor at Louisiana State University’s Energy Studies Research Center.

Instead, a pay-per-mile policy charges drivers for every mile, which provides an incentive for people to drive less.

“This reduction in driving could alleviate some transportation problems such as pollution, traffic jams and accidents,” he adds. “The inclusion of a telematics device enables insurance costs per mile to vary based on driving data as well, providing an additional incentive for safe driving. This incentive can lead individuals to drive slower and more cautious – again to reduce pollution and accidents. “

In other words: telematics devices and the corresponding pay-per-mile programs are helping safe and low-mileage drivers save money today. But you could also save some money for the drivers as a group and possibly reduce pollution.

The saving has its price

Brogan Woodburn who covers auto insurance for the auto location Detroit office, says he saved money with Progressive’s Snapshot program. His insurance costs dropped from $ 120 a month to $ 65.

“My rate has almost been cut in half,” he says.

But he says the results can vary.

“Remember, I work from home and only drive a few hundred kilometers a month,” he says. “I had a good overall safe driving score, but I think most of the discount was based on how little I drove.”

Woodburn compared several telematics programs and found that mileage was a major ranking factor for most of them.

“With some programs, it can be difficult for a driver to get a discount when they have a long commute to work, no matter how safely they drive,” he adds.

Are telematics and pay-per-mile right for you?

So should you go for one of these new pay-per-use auto insurance programs? Here’s how to find out if it’s right for you:

If you are a safe driver. If you’ve had no recent moving company accidents or violations, pay-per-use might be worth considering. How do you know if you are a good driver? Here is my current USA Today column this will help you answer the question.

When you don’t drive a lot. If your car has been parked in the garage for days, paying insurance by miles instead of a flat rate will likely lower your insurance bill. On the other hand, you may not need a car at all.

When you don’t worry too much about privacy. You share your location information with your insurance company. If you don’t want a third party to know where you are going, skip vehicle telematics and get regular auto insurance.

Coleman says she met all three of these criteria and is happy with her savings from Allstate’s Milewise program.

“I saved money,” she says. “I also like to be able to see how I drive.”

From auto mechanic to cash adviser: How one monetary planner shifted into a brand new gear

At 15, Dan Murphy took a job in a body shop. For almost a decade he worked as a mechanic with no long-term career plan. Within a few years he was married and had two children. It was then that he realized: “I don’t want to be a mechanic for the rest of my life.”

Ambitious by nature, Murphy attended engineering school to improve his body repair skills. He also qualified for special training in repairing Toyota and BMW vehicles.

But at 23, Murphy made a life-changing decision to reinvent himself as a financial planner. In high school, he had enjoyed a stock picking game that a teacher used to introduce students to the stock market. After receiving an inheritance at 18, he enjoyed researching how to invest it.

“I made a commitment,” said Murphy, now an independent consultant in Shoreview, Minn. “I thought, ‘I’ll do that at all costs.'”

Murphy spent the next four years studying personal finance and improving his sales skills. To improve his résumé, he quit working as a mechanic and took a job as a sales manager at a tool dealer.

Meanwhile, he listened to motivational speaker Zig Ziglar’s tapes to learn how to think and act like a top salesman. “You can have anything in life that you want, if you only help enough other people to get what they want,” explained Ziglar. Murphy loved that.

However, despite his positive attitude, Murphy ran into roadblocks. At a major investment firm, the hiring manager heard Murphy’s story, giggled, and showed him the door. He applied unsuccessfully for a few other financial planning jobs. “I’ve spent four years hoping and praying that someone would give me a chance,” Murphy said. “And when someone did it, it changed my life completely.”

Murphy’s entry into the business took place in stages. In his first interview at an Ameriprise Financial branch, the interviewer asked, “How many people do you know who have to invest $ 50,000?” And “How many people do you know who have to invest $ 5,000 a month?”

“I have no high net worth friends,” Murphy replied.

The Ameriprise interviewer suggested applying to the company’s call center that served high net worth clients. During that interview, Murphy was asked experiential questions such as, “Tell me about a time you managed a portfolio.”

“I couldn’t answer those questions because I didn’t have this experience,” Murphy said. “But before I left, I got honest. I said, ‘Look, I don’t have the background that you want. But I’m the kind of person you want If you are looking for someone who surpasses everyone else, then this is me. “

He got the job. It paid $ 30,000 a year plus commission.

For the next six years, Murphy took customer calls and helped resolve their financial concerns. Eventually he moved to an independent broker-dealer and then joined an RIA firm. He is in the process of starting his own company Greater Good Financial, of which he donates 20% of sales to charitable organizations.

“That’s my way of saying, ‘I’m not in for the money,'” he said. “I hope to build trust this way. And I choose charities that give others the opportunity to invest in themselves, as I’ve been looking for in the four years I’ve tried to get into the industry. ”

While Murphy has earned two job titles (Chartered Life Underwriter and Chartered Retirement Planning Counselor), ideally he would like to add the most popular one: Certified Financial Planner. But he cannot because the CFP Board of Directors requires a bachelor’s degree or higher to be awarded the title.

“I’ve lost occasionally [a prospect] who asks if I am a CFP, ”he said. “I say no because I don’t have a college degree. I understand the need for a box that people can fit in. But I would change the CFP rules to make them more experience-based. “

In his early years at Ameriprise, Murphy saw many young consultants fail. As fresh college graduates, they thought they’d learn the ropes and make $ 80,000 or more.

“I’ve seen so many of them fail,” Murphy said. “They had financial degrees and some had an MBA. But it’s tough business. It’s a lot of stress. And it really is a sales job. It takes human skills to be successful. “

More: Do You Really Need A Financial Advisor? Take this six question test to find out.

Plus: Negotiating a claim with your insurance company is no fun. This is how advisors negotiate their way to higher payouts

Cash for well being suppliers impacted by auto no-fault modifications advances in Michigan Legislature

The legislation is set to get over health care providers affected by an upcoming reimbursement change in car injury treatment that was unveiled in the legislature on Wednesday.

Last week, Michigan House voted through an amended version of Senate Act 28 to create a $ 10 million fund for acute brain and spine injury facilities and caregivers who are suffering structural losses due to the upcoming changes. On Wednesday, the Senate revised that number up and approved $ 25 million for the fund.

The amended version of the bill is now being returned to the House for further review.

Payments would be made on a first-come-first-served basis and providers could only get the funds if they can provide and demonstrate information about the fees for their auto and non-auto injury treatment services, that they are facing a “systematic deficit” caused by changes in the flawless system of the state.

Connected: Law passed by the House would create a fund for health care providers who care for car accident victims

In July, insurance company reimbursement for health care services for survivors of car accidents not covered by Medicare will be reduced by 45% under the fee schedule set in the 2019 Act. This change, say many current post-acute care providers, will either put them out of business or force them to stop providing services to auto-accident patients. And car accident victims fear losing access to quality care.

Some health care providers treating car accident victims have criticized the fund proposal, calling it too little and too late to help troubled businesses and survivors. The Michigan Brain Injury Provider Council said in a statement Wednesday that it is opposed to the program and is urging lawmakers to change the policy instead.

“This program, which is set out in Senate Bill 28, does not provide sufficient relief in time or to the extent necessary to allow vendors to keep payroll and operations going,” said Tom Judd, president of the council. “The inevitable result is the imminent disruption of supplies and the displacement of vulnerable casualties across Michigan.”

In 2019, Republican-led Legislature and Governor Gretchen Whitmer voted to overhaul Michigan’s flawless auto insurance system to lower the state’s highest costs and signed bills that were passed with broad bipartisan support.

Part of that change was to allow drivers to choose their desired level of Personal Injury Protection (PIP), which went into effect last summer – but another important part of the deal was putting in place a fee schedule for how much Fees for health care insurance providers in handling car accidents.

Senator Curtis Hertel, Jr., D-East Lansing, said he doesn’t think $ 25 million will be enough to solve the problem, but believes it will provide a “bridge” for vendors while lawmakers do Debate continues.

“Do I think $ 25 million will be enough? Not even close, ”he said. “I believe this is a bridge to this body and the House trying to find an answer, and these families deserve nothing less than that.”

Connected: Accident victims, health care providers are shouting about the imminent change in medical fees for car accidents

House spokesman Jason Wentworth, R-Farwell, said last week the fund could help lawmakers determine any issues with current policy and what to do in the future, according to Gongwer News Service.

Proponents of the directive, due to come into effect in July, say the reimbursement fee law changes are an important part of the equation when it comes to lowering auto insurance rates. The Insurance Alliance of Michigan estimates that just by reducing the Michigan Catastrophic Claims Association’s vehicle fee reduction, Michigan drivers saved more than $ 1 billion, excluding the individual saver drivers achieved by choosing different PIP coverage levels.

Average auto insurance rates have dropped significantly since the first phase of Michigan’s Auto Insurance Act came into effect, but it is still one of the most expensive places in the country to insure a car.

Related coverage:

Average auto insurance rates in Michigan are falling significantly, but they are still among the highest in the United States

Michigan’s new auto insurance law is causing a stir and concern

What to Consider When Buying Michigan Auto Insurance?

Will Michigan drivers change their policies once the new auto insurance law goes into effect? Many still don’t know

Why it is difficult to predict individual savings under the new Motor Insurance Act

Auto insurers in Michigan see “coronavirus windfall” as the driving force, accidents are decreasing

About half of Michigan’s insured drivers would not choose to opt out of faultless coverage, a survey found

Governor Whitmer signs Michigan auto insurance revision bill

Michigan orders auto insurance reimbursements for “extreme driving restrictions.”

Michiganders see another drop in auto insurance fees in 2021

Hyperlink Between Canadian Auto Gross sales, Cash Laundering Probed

OTTAWA – A public inquiry in British Columbia, Canada has heightened concerns about how criminal networks could use car dealers to launder dirty money.

Buyers may be willing to pay high prices for vehicles in cash, with dealers having difficulty determining the source of these funds. Corrupt dealers or buyers may export or import automobiles at excessively high or low prices in order to transfer the value through profit or loss.

Florida International University professor of economics and trade-related money laundering expert John Zdanowicz raised concerns about money laundering in British Columbia at a December hearing for the Cullen Commission. The investigation was fueled by concerns that dirty money was driving up prices in Vancouver’s overheated real estate market.

Zdanowicz tells Wards that the auto and parts trade can move dirty money from one country to another. Also, stolen cars are dismantled and illegally exported not only to make a dirty dollar, but also to get hot money in exchange for laundering the proceeds of crime.

Zdanowicz testified before the Cullen Commission, headed by Justice Austin Cullen of the British Columbia Supreme Court, about money laundering and published data on business within and outside the province.

This included sales of severely undervalued exports of automotive products through ports in British Columbia that may have been involved in dirty transfers of value. New RVs were featured in one category, with $ 47 million ($ 37.7 million) in exports to China, Hong Kong, the Philippines, and Cambodia being up to 46% undervalued (compared to the average price for a “Lower quartile” of all these trades – the middle number of a data set between the median and the lowest number).

These low prices should be suspicious enough to warrant additional scrutiny of exporters and importers by customs and law enforcement agencies, Zdanowicz said. The same applies to exported cars worth CAD 6 million (USD 4.8 million) to China (undervalued by up to 15%). Diesel-powered trucks worth more than CAD 10 million (US $ 8 million) exported to the US (undervaluations between 50% and 70%); and CAD 8 million (US $ 6.4 million) of bodies (including cabs) exported to the US with undervaluations of up to 89%.

A paper presented to the Cullen Commission by a researcher at St. Mary’s University in Halifax, NS, Canada, emphasized the usefulness of cars for laundering money. Quoting a 2019 study by Vancouver-based crime advisor Peter German and Associates, it concluded, “Vehicles are used in both Canada and internationally as a means of laundering the proceeds of crime.” Shopping is common in British Columbia Made with cash, transfers from China, and apps like China’s WeChat Pay. If no questions are asked, vehicles can later be sold for clean money.

Another technique is to make a cash deposit to reserve an expensive vehicle for sale – only to have that promise withdrawn and the money paid back through a clean wire or check.

Leasing can also be a useful way to dump criminal money. If the police suspect a vehicle has been leased with dirty money, under confiscation laws, they cannot seize it until proof of origin is in, as formal ownership remains with a dealer.

Vehicles purchased with the proceeds of crime can also be registered with individuals with no criminal record, such as a lawyer, friend or business partner, and re-protected from seizure.

Huw Williams (Picture on the left), Canadian Car Dealer Assn. According to the director of public affairs, Wards’ new car dealers are less vulnerable to money laundering risks than used car dealers. One reason for this is that funding is often provided through financial institutions, which are required by law to conduct due diligence on potential buyers or lessees to ensure they are not linked to criminal offenses.

Also, there is a severe risk for new car dealers who are closely connected to the manufacturers that the sale to criminals or their employees goes undetected – they could lose their franchise agreements: “A lot of attention is paid,” says Williams.

Car dealers in Canada are not legally required to prove the source of the funds they receive, says Bob Pierce, Member Services Director of Used Car Dealers Assn. from Ontario.

However, banks often ask merchants to identify customers themselves. He says, “You can ask: Where did you get the money from?” But salespeople are not detectives. We didn’t train them to do this, and neither should we. How can we tell if a driver’s license was issued by a Department of Transportation or by people issuing false passports? ”

Auto insurers profited unfairly from pandemic and may return cash to shoppers, AG says

The agency is committed to “fair and actuarially reasonable” tariffs, including taking into account “changes in consumer driving behavior”.

There is ample evidence that the crisis triggered by the coronavirus caused consumers to drive far fewer kilometers than they did before the pandemic.

Healey’s office claims data shows a reduction in driving behavior of about 50 percent in 2020 and, as a result, there have been fewer accidents, fewer claims, and fewer insurer payouts.

A key economic indicator in the insurance industry is what is known as the loss ratio – the amount an insurer pays for claims (losses) compared to the amount it receives for premiums.

The total pre-pandemic loss rate was around 62, according to the Attorney General’s office, which meant insurers withholding 38 cents of every dollar they received as profit, after administrative and other expenses. Last year, however, the claims ratio dropped to 49, which earned insurers 51 cents of every dollar they received – an increase of 34.2 percent.

“This decline in the claims ratio resulted in approximately $ 700 million in additional profits for insurance companies,” said the letter signed by Glenn Kaplan, chief of the attorney general’s department dealing with insurance matters.

The auto insurance industry in Massachusetts was deregulated in 2008. The insurance officer previously checked by how much insurers could increase their premiums.

Now insurers can set their own rates, but the agent has the power to review them to make sure they are not excessively high. In this case, approval can be refused.

During the pandemic, the insurance department touted its role in encouraging insurers to provide voluntary reimbursement. It also encouraged insurers to defer premiums if drivers got into economic trouble due to the pandemic.

According to a recent report by the Massachusetts Public Interest Research Group (MassPIRG), discounts last year ranged from 15 percent for two months to 15 percent for six months.

The average annual premium in Massachusetts is approximately $ 1,200. As such, the average discounts ranged from $ 30 to $ 90, far less than 10 percent, even on the most generous of refunds. (MAPFRE, the dominant insurer in Massachusetts, with about a quarter of all policies in the state, returned about $ 30 million to its customers last year as part of a premium giveback, it said.)

In their letter, the attorney general warned that insurers would set high premiums in the future.

“We believe that you need to act to prevent insurers from trying to raise tariffs any further,” based on the assumption that “things are going back to normal,” the letter said.

Healey’s position is backed by a dozen lawmakers, spearheaded by Senator Barry Finegold, who wrote to the commission in December that high premiums disproportionately high in “communities hardest hit by COVID-19” as “low” in light of reduced driving behavior harm -income urban communities and communities of color. ”

Finegold’s district includes Lawrence, one of the communities hardest hit by the pandemic.

“The numbers speak for themselves,” said Finegold in an interview. “It’s only fair to give a discount.”

MassPIRG also requested consumer relief in a letter to the insurance officer.

“People drive less so their costs should be significantly lower,” Deirdre Cummings, Legislative Director of MassPIRG, said in an interview. “That’s common sense.”

Some refund advocates pointed to California, where the Insurance Commission found that auto insurers have overloaded drivers and ordered them to report by April 30 “how to return additional premiums to drivers,” according to a recent press release this agency.

Christopher Stark, executive director of the Massachusetts Insurance Federation, a lobby group, said auto insurers had done their part in issuing refunds, suspending policy cancellations, and offering payment plans for policyholders who cannot pay premiums immediately.

Doubting the attorney general’s calculations, he said the insurance industry’s losses for 2020 are still being worked on and may be higher than the numbers cited by others.

Stark also pointed out that insurers do not ask for premium increases retrospectively after losses have exceeded expected levels.

Have a problem? Submit your consumer problem to sean.murphy@globe.com. Follow him on Twitter @spmurphyboston.

Present Me the Cash: Auto trade bouncing again from pandemic

The pandemic has slowed car shows across the country, but there are still plenty of new cars and trucks ready to hit the streets this year.

“Consumers in the market are of course still looking for vehicles and the auto industry is not stalling,” said automotive expert Mike Caudill.

Caudill takes us through the Steel Museum in Detroit to take a look at the latest vehicles from 2021.

First up – the Jeep Grand Cherokee L.

“L stands for long wheelbase. It is the first time with the jeep that they offer 3 rows. In the 4 × 4 outdoor area, you get 5 different off-road driving modes, ”added Caudill. “With the interior, they refined it with a massive touchscreen inside this vehicle, and one of my favorite features is the massaging of seats inside this jeep.”

Price starts at $ 30,000.

Another choice for off-road use is the Nissan Frontier pick-up and the Pathfinder, Nissan’s flagship, the Pathfinder.

“The exterior design is fantastic because it has been redesigned for the new year. There’s this wireless induction charging touchscreen on the inside, ”said Caudill.

If you’re looking for something a little more upscale, check out the Lincoln Nautilus, with its touchscreen controls and white leather seats.

“America’s best-selling three-row luxury SUV of all time is in the right place. It’s the Acura MDX, and they’ve redesigned it from the ground up. It will be lower, longer and wider. It’s about performance, ”said Caudill. “One of the coolest tech features you can find in the auto industry right now is the introduction and integration of Amazon and its Alexa service into the interior of this vehicle. Just say ‘Hey Alexa’ and you can work with it just like in your home. “

This starts at $ 50,000.

When it comes to electric vehicles, Toyota is America’s number one hybrid seller. Their latest offering – the Mirai.

“This is a hydrogen fuel cell plug-in vehicle that allows you to build this hydrogen fuel cell technology into the site,” Caudill said. “Toyota is hedging its bets on the next iteration of the technology. On the inside made of white leather, touchscreens show all the technical features of the vehicle interior. “

The pandemic had a major impact on the auto industry, forcing many manufacturing plants to close. Things are picking up speed again now.

“At first we thought the sales in the industry were really going to go down, but automakers got very creative with how they rated their vehicles and the best part is that the industry hasn’t hit as badly as we thought it would. “

While auto sales have rebounded and demand has increased, the auto industry is now grappling with another problem. A lack of computer chips.

New cars cannot be made without them. The shortage is now forcing many companies to cut production.

Chinese language electrical automotive start-up Li Auto expects to promote fewer than Nio

A Li Xiang One Hybrid SUV is on display during the 18th Guangzhou International Auto Show in Guangzhou, China on Nov 23, 2020.

Li Zhihao | Visual China Group | Getty Images

BEIJING – Nasdaq-listed Chinese automaker Li car forecasts deliveries in the first quarter that will be below those of competitors.

Li Auto announced late Thursday that it is expected to deliver between 10,500 and 11,500 cars, or fewer than 4,000 vehicles per month, for the first quarter of the year. Shares fell 9.8% in the New York trading session on a wider market sell-off. The stock lost another 3.75% in over-the-counter trading.

Niowhich competes directly with Li Auto in the high-end SUV market delivered more than 7,000 units both December and January. The company will release its latest financial report on Monday.

Xpeng delivered 5,700 cars in December and more than 6,000 in January.

While the numbers of startups suggest rapid growth, they pale in comparison to Tesla. Elon Musk’s electric car The company delivered almost half a million vehicles worldwide last year or an average of more than 41,000 cars a month.

Despite the New Year holiday in mid-February this year, Li Auto’s poor forecast is worrying, said Tu Le, founder of Beijing-based consulting firm Sino Auto Insights.

He pointed out that the company only has one product compared to the other startups and that it should deliver at least 5,000 to 7,000 vehicles a month to keep up.

The only vehicle from Li Auto that Li One is a hybrid electric vehicle That comes with a fuel tank to charge the battery.

Analysts have said the feature makes the Li One attractive to Chinese consumers who are concerned about running out of power without access to a charging station.

Last year, the Li One was one of the top 10 high-end SUVs sold in China, regardless of the fuel type, according to the passenger car association. The company said, however Deliveries fell to 5,379 units in January. from 6,126 a month ago.

The company reported total revenue of 4.15 billion yuan ($ 635.5 million) for the fourth quarter, compared with 2.51 billion yuan in the previous quarter.

Li Auto expects total sales for the first three months of this year to be in line with the last two quarters, with an expected range of 2.94 to 3.22 billion yuan.