Would You Go Electric for Free Insurance?

The ‘buy a car and get insurance’ shtick has been around the block before.

General Motors experimented last year with giving away insurance as a way to entice buyers, but quietly let the program expire after it failed to bring in crowds of willing customers.

Honda has become the latest to try and lure customers with free insurance, but only on a single model that really shouldn’t need incentives or gimmicks to boost sales: The Honda Fit EV. You would think Honda’s first electric vehicle would be popular enough on its own, but the company hopes its offer of no-cost insurance will help get 1,100 people to sign the dotted line on a lease.

If this story seems suspicious to you, you’re not alone. I read about it and immediately asked myself three questions:

Why has Honda’s first EV flown under the radar when other companies tout their wares as Earth’s savior?

Why only 1,100 vehicles?

Why would a low-volume Honda require any form of incentive, when it could sell a thousand Fits powered by a lawn mower engine if it wanted to?

Honda is notoriously conservative when it comes to new product and could very well be testing the market for future EV demand, hence the low volume production. It could test the market, though, without such a cheesy offer as free insurance on a new vehicle that the Honda faithful should snap up as quick as it rolls off the assembly line. Honda’s reasoning for the insurance offer goes something like this,

Honda officials said they see the offer as a way to remove a barrier to the introduction of their first electric car in the U.S. They were concerned that insurers would have trouble rating the financial risk of covering the repairs of such a low-volume vehicle.

The “barrier of introduction” for first-time EV buyers isn’t insurance. It’s range and re-charging anxiety. Automakers couldn’t care less about insurance costs or the ability to rate the financial risk of insurers. I don’t recall any offers to cover insurance on limited runs of the Acura NSX or Honda S2000. This stinks of insecurity to me, and seems like a sign that even Honda remains leery of electric vehicles.

The Fit EV should have a range of about 83 miles and a recharge time of about 3 hours. There’s no word on how long the insurance policy lasts.

Would an offer of free insurance be enough to get you into a Honda Fit EV?


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  1. You guys are right, the biggest hurdle is the anxiety of buyers is being able to drive normally to work and not have to worry about being limited
    by having to stop at a charging station ,which is going to take at least another 2 years to build and at a very small scale.The only EV cars so far are build by Liberty E Cars who have a 200 mile single charge, wireless no plug in requirements and no charging stations needed. You can go to http://evcarsinvest.com to get more information and read all about it. They should be coming to US and I hope more companies like that will come with high technology so we can break free of this oil controlled market.

  2. I spent several years with the team developing the EV-1 propulsion system and also drove one quite a few hundred trips. I can see why none of the custoers wanted to give them back and the EV-1 saga remains one of the worst transgressions of GM since the conspiracy with Standard Oil to scrap the nation’s street railways. It seems that what’s good for GM is actually NOT good for Americal.

  3. The story does mention the cars are just a lease, but Randy’s in-depth knowledge of past EV efforts is impressive.
    Still, I wouldn’t lease one of these at that price. Even with free insurance.

  4. You haven’t done your homework ver well. First of all, the Fit EV is NOT FOR SALE. It is lease-only, at a cracking $389 a month. As you mention, only 1100 will go out, but that’s over a two year period and in only three locations– California, Oregon, and the US east coast. (Most likely only NY/Mass/NJ region.) Given the number of just over 500 per year in areas that represent millions of vehicle sales, this is really a NON-EVENT. Statistically ZERO market penetration. Obviously Honda is trying to get a feel for how the cars work in the field, and then take them back to evaluate them mechanically and electrically.

    Remember GM’s EV-1? Same deal and virtually the same number of cars.
    Like the Fit, that was a real-world engineering evluation.

    The reason for leasing 1100 Fit EV’sinstead of an even thousand is to cover the anticipated number of cars lost to theft, repossssion and accidents over the lease period.

    The matter of free insurance is not noteworthy because as the cars remain the property of Honda, the company wants to make sure that any of them destroyed or that otherwise leave the care of their lessors are returned to the company. In a conventional lease, the lessee is required to insure the car and pay off the lessor (usualy a third party) in case of accident or default, and the manufacturer is not involved.
    The bottom line for me is the question “How much will these cars cost to buy?” We don’t know, but Honda will look at the experience of Nissan (Leaf) and GM (Volt) and their evalution of the Fit EV to decide if they will sell the car in North America. In the end, Rick Wagoner (The Man Who Killed GM) decided the EV-1 could not be made profitable, and being the most cynical and shortsighted corporation in the world, GM went on to produce “profitable” vehicles that ushered them into bankruptcy.

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