Root's Connected Car Strategy: Toyota CAS Partnership, Carvana Embedded Scaling, and OEM Self-Driving Pricing
Root founder Alex Timm gave the sharpest first-person articulation yet of the liability-shift thesis on TheStreet's Roundtable — from the insurer best positioned to benefit from it:
"The market I think will fundamentally transform… Change the dynamics of pricing, change the dynamics of who owns the liability, really change everything." — Alex Timm, Root founder (TheStreet)
The strategy — get inside the car before the OEM takes the risk: "We're partnering with these OEMs that are developing a lot of this technology and that actually control the vehicles so that we can embed directly with the vehicle technology1… The vehicle manufacturers are the ones that are the closest to truly controlling this kind of technology. That's really the cornerstone to our strategy" (Timm, TheStreet). On AV risk specifically, his read is that Waymo's loss data flatters the risk: "They're not crashing very much, but they're also not driving in a lot of very risky situations."
Q2 2026 evidence the channel strategy is working: Root's Q2 shareholder letter names Hyundai Capital America, Toyota and Carvana as partners, with partner and agent channels making up 51% of new business; the company earned $25.4M in the quarter, spending about 92 cents on claims and expenses per premium dollar (TheStreet). Root also issued a new warrant covering up to 1,525,560 Class A shares (~8.5% of fully diluted shares), replacing Carvana's long-term warrants — deepening the embedded-distribution tie [/markets/ROOT/2026/09/28].
But the market has stopped paying for the story: ROOT is down 48.8% from its 52-week high (RSI 21), and revenue growth has stalled at +1.6% YoY with quarterly revenue drifting slightly lower ($393.5M → $389.2M) [/markets/ROOT/2026/09/28]. The OEM-embedded AV thesis is not yet visible in the growth line — Root is profitable and beat estimates 4/4 quarters, but the connected-car optionality the strategy is built on hasn't converted into premium growth yet. That gap between strategic positioning and reported growth is itself a data point for the mispricing thesis: if OEM-embedded underwriting is the future of personal auto, the market is currently valuing Root as if it never arrives.
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An instance of Pricing software-defined vehicles requires direct integration with the vehicle's telemetry. — Root's founder states the theme's law as corporate strategy — pricing software-defined driving requires embedding directly with the OEM's vehicle data before the manufacturer takes the risk itself. ↩︎