First BMW i3 owner report

[NightHawk]

I was totally committed to the idea of getting an I3 with range extender as the next EV in my fleet, on the hope that leases would be in the 450-500$ range. Information coming from BMW places the lease rates much much higher. BMW apparently doesn't even plan to apply the full $7500 of tax rebate to the lease, keeping 35% for itself.

In addition, many BMW dealers have said they would charge a premium above MSRP.

According to insideeevs.com

BMW does not breakout any lease examples, but assuming the same $45,800 vehicle on a 36 month lease (39% residual) with $5,000 down, it looks like a lease will run the consumer about $550/month on a 3 year term. The base, all electric BMW i3 starts at $41,350, which would make those leases come in at just under $500/month (with the $5,000 down).

Dividing the $5K down by 36 months adds approximately $140 to the estimated $550 for an I3 Rex, almost $700. Plus whatever the dealer markup adds...

To me, these are deal-killers. I have turned my attention to a Volt as my next EV and currently shopping for one. Looks like you can get a 15000 mile, $900 driveaway for around $300 plus tax a month on a three year lease, fully loaded. Less than half of what a BMW would cost.

I saw a BMW i3 ad on TV tonight in Southern California and they showed a 24month lease special for "excellent credit" qualified lessees. The screen showed $44K MSRP minus a $7500 lease cash resulting in $239/month plus $4000 down plus tax/license/etc fees, thru 3/31/2015.

 

[EVA]

Hybridbear - I agree with you. I test drove one last summer. They are nice. I like them better than the Leaf. Our FFE lease expires in Dec. So I'm starting to think about what to replace it with. It is too bad nobody has come out with a new car in three years - or one that is significantly different from the this generation of cars.

 

[hybridbear]

I saw a BMW i3 ad on TV tonight in Southern California and they showed a 24month lease special for "excellent credit" qualified lessees. The screen showed $44K MSRP minus a $7500 lease cash resulting in $239/month plus $4000 down plus tax/license/etc fees, thru 3/31/2015.

If they have promotions like that now I hope the discount will be a couple thousand dollars higher in a year when the car is that much older.

They are discounting them, but not like other EVs. Expect $3-4k off MSRP. Which is about double the discount you will get on any other new BMW. Add to that the fact that the 2015 will have more standard features, which will eat some of that $3-4k.

So if you get $3-4k off MSRP plus the $7500 tax credit that would bring the capitalized cost down to about $30k. If the residual is around $21k then I would think that an i3 lease would have a similar cost to our current FFE lease of $251 per month.

Hybridbear - I agree with you. I test drove one last summer. They are nice. I like them better than the Leaf. Our FFE lease expires in Dec. So I'm starting to think about what to replace it with. It is too bad nobody has come out with a new car in three years - or one that is significantly different from the this generation of cars.

I am also quite disappointed that there won't be more options when leases end for the early FFE adopters.

 

[michael]

The low cost of entry and the BMW cachet are attractive. In the last weeks I have seen a ton of them driving around Los Angeles. The do promotions at the symphony hall downtown as well....two I3's with hot babes in black dresses in the lobby.

On the other hand, with 24 month leases, the upfront $4K adds a lot to the effective monthly, plus not eligible for the $2500 state rebate. By the time you add tax, close to $450 a month. And for that you get a car not as well appointed as our FFEs.

And those rear doors!!!!! My wife vetoed the I3 on the spot when she saw how they work.

 

[twscrap]

I saw a BMW i3 ad on TV tonight in Southern California and they showed a 24month lease special for "excellent credit" qualified lessees. The screen showed $44K MSRP minus a $7500 lease cash resulting in $239/month plus $4000 down plus tax/license/etc fees, thru 3/31/2015.

If they have promotions like that now I hope the discount will be a couple thousand dollars higher in a year when the car is that much older.

They are discounting them, but not like other EVs. Expect $3-4k off MSRP. Which is about double the discount you will get on any other new BMW. Add to that the fact that the 2015 will have more standard features, which will eat some of that $3-4k.

So if you get $3-4k off MSRP plus the $7500 tax credit that would bring the capitalized cost down to about $30k. If the residual is around $21k then I would think that an i3 lease would have a similar cost to our current FFE lease of $251 per month.

Hybridbear - I agree with you. I test drove one last summer. They are nice. I like them better than the Leaf. Our FFE lease expires in Dec. So I'm starting to think about what to replace it with. It is too bad nobody has come out with a new car in three years - or one that is significantly different from the this generation of cars.

I am also quite disappointed that there won't be more options when leases end for the early FFE adopters.

None of this is as it appears. Those advertised deals aren't what they seem. First, they don't include the sales tax in the figures. Count on that adding $100 per month to the price. So, $239+100+4000/24 = $506/month for 24 months - and it is undoubtedly for 10.5k miles/year. So just over $12k to drive the car for 24 months.

Another point that you should be aware of is that BMW Financial Services does not give you $7500 as the tax credit for a lease. They give you $4875. If you want the $7500, you have to buy. Period. Keep that in mind when running your numbers. Even on a 36 month lease that adds $73/month. http://insideevs.com/bmw-i3-tax-credits-residuals-owners-choice-owners-choice-with-flex-balloon-payments-oh-my/

BMW has moved an average of more than 1000 units per month for the past 7 months. Considering they were hoping to move 5-6k per year in the US, there is little incentive for further discounting unless sales drop.

Don't get me wrong. I'd be happy as hell if at the end of my three years I could get into a new i3 at ~$250/month, but it isn't happening.

 

[hybridbear]

None of this is as it appears. Those advertised deals aren't what they seem. First, they don't include the sales tax in the figures. Count on that adding $100 per month to the price. So, $239+100+4000/24 = $506/month for 24 months - and it is undoubtedly for 10.5k miles/year. So just over $12k to drive the car for 24 months.

Another point that you should be aware of is that BMW Financial Services does not give you $7500 as the tax credit for a lease. They give you $4875. If you want the $7500, you have to buy. Period. Keep that in mind when running your numbers. Even on a 36 month lease that adds $73/month. http://insideevs.com/bmw-i3-tax-credits-residuals-owners-choice-owners-choice-with-flex-balloon-payments-oh-my/

BMW has moved an average of more than 1000 units per month for the past 7 months. Considering they were hoping to move 5-6k per year in the US, there is little incentive for further discounting unless sales drop.

Don't get me wrong. I'd be happy as hell if at the end of my three years I could get into a new i3 at ~$250/month, but it isn't happening.

Thanks for sharing. This completely changes my view of BMW as a company regarding EVs. I was previously encouraged that BMW was promoting EVs, but now I will cross them off the list. With deceptive tactics like that they don't deserve the business.

 

[michael]

The sales tax must be added, but the amount varies. Here in California, for leases sales tax is collected on the actual payment (in this example, roughly 9% of the $250/month plus 9% of the down payment (which includes not only customer cash but manufacturer cash).

The 4000/24 is a big disguised cost.

 

[twscrap]

Thanks for sharing. This completely changes my view of BMW as a company regarding EVs. I was previously encouraged that BMW was promoting EVs, but now I will cross them off the list. With deceptive tactics like that they don't deserve the business.

The fact is BMW is promoting EVs and is in it for the long haul. They are unwilling to sell the cars at a loss, and are having success in doing that. To me this indicates that they truly believe that EVs are the future of personal transportation. Not sure you can say the same about companies that are producing compliance cars. As a manufacturer you are either in this because you believe in it, or you are in it to satisfy CARB. BMW is clearly not just in this just so they can sell cars in CA. Unlike many other manufacturers, BMW has also set what they believe are reasonable residuals on their leases so they don't get stuck with tons of EVs that come off leases that are worth considerably less than what the residuals are. Every other EV manufacturer that leases EVs is going to have a problem in the coming years with overvalued EVs being turned in. The downside for the current BMW buyer is with a lower residual, you are paying more to drive their vehicle than any other EV currently available for lease.

As for the advertised lease deals, remember that the ads are placed by dealers, and not BMW. Manufacturers have little to no control over what dealers actually do or how they choose to advertise. And they really are no different than what other car dealers do, including some Ford dealers. Not sure which part you find deceptive - I personally don't find the ads deceptive, you just need to do the math for yourself. If its the $4875 v $7500 tax credit that you find deceptive, from day one BMW Financial Services has said that manufacturers don't actually receive $7500 in tax credit for leases, they only receive $4875 - which is the amount they are willing to pass along. I haven't seen another manufacturer comment one way or another on this, and while many offer what appears to be $7500, the $2625 difference could just be incentive offers from the manufacturer so it looks like you are getting the same tax credit as if you had bought.

In the end, I personally believe that BMW is all in on EVs more than any other manufacturer except for Tesla. In my view, they will beat every other make to market with a second mass marketed BEV in their lineup (except perhaps Tesla). And to me, that says more about their commitment to EVs than anything.

 

[michael]

Despite the fact that BMW claims it receives only $4875 of the $7500 tax credit, I am skeptical. Can someone show me where it is written in the law that it happens? I am unaware of ANYONE else who makes this contention.

Please, BMW, if it is true that you only get 4875, show us what law causes that to happen. I just find it hard to believe that you seem the only people doing that way.



The IRS website states:


Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks.

For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009). For additional information see Notice 2009-89.

Section 30D originally was enacted in the Energy Improvement and Extension Act of 2008. The American Recovery and Reinvestment Act of 2009 amended section 30D effective for vehicles acquired after December 31, 2009. Section 30D was also modified by the American Taxpayer Relief Act (ATRA) 2013 for certain 2 or 3 wheeled vehicles acquired after December 31, 2011 and before January 1, 2014.

The vehicles must be acquired for use or lease and not for resale. Additionally, the original use of the vehicle must commence with the taxpayer and the vehicle must be used predominantly in the United States. For purposes of the 30D credit, a vehicle is not considered acquired prior to the time when title to the vehicle passes to the taxpayer under state law.

Notice 2009-89 applies to vehicles acquired subsequent to December 31, 2009 and provides procedures that a vehicle manufacturer may use if it chooses to certify that a vehicle meets certain requirements that must be satisfied to claim the Qualified Plug-in Electric Drive Motor Vehicle Credit and the amount of the credit allowable with respect to that vehicle

Credit Amounts for Qualified Vehicles Acquired After December 31, 2009

Qualified Plug-In Electric Drive Motor Vehicle Credit (IRC 30D) Phase Out
The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.



Note the sentence in bold:

The vehicles must be acquired for use or lease and not for resale


I read this to say the BMWFS gets the $7500 no matter what they are claiming. Am I wrong? Why?

 

[jmueller065]

I read this to say the BMWFS gets the $7500 no matter what they are claiming. Am I wrong? Why?

BMW does get the $7500 but they don't pass all $7500 on to the customer. They keep some of it.

 

[twscrap]

What doesn't make sense about the whole thing is BMWFS created a whole new financing option where you own the car but it is structured like a lease. That way you can get the $7500 credit. As a result, almost no one is actually leasing, they're opting for the 'Owner's Choice' financing to get the $7500. If BMW is in fact just pocketing the $2625, why would they go to the effort of creating a financing option that circumvents the problem and effectively eliminates the possibility of anyone leasing an i3? Seems like a whole lot of effort for no gain if they are getting $7500 in tax credit for the leases.

 

[michael]

I read this to say the BMWFS gets the $7500 no matter what they are claiming. Am I wrong? Why?

BMW does get the $7500 but they don't pass all $7500 on to the customer. They keep some of it.

That's the whole point. BMW claims that they are getting only $4875 and that they are passing on the whole thing to the customer. That is exactly what I am questioning.

The following is from

http://insideevs.com/bmw-i3-tax-credits-residuals-owners-choice-owners-choice-with-flex-balloon-payments-oh-my/


The document also showed that BMW is only going to apply $4,875 of the expected $7,500 federal tax credit as a capitol cost reduction to leases. This led some people to assume BMW is simply pocketing the $2,625. I raised this question to Timm Bock, Product Development & Pricing Manager for BMW Financial Services and he told me that BMW will only realize $4,875 for the federal tax credit and that they will pass every cent of what they get along to the customer. I still don’t know exactly why they don’t get the full $,7,500 because it seems the other EV manufacturers do since they pass it along to the customer as a capitol cost reduction in their lease offerings. So either they get more than BMW does which would be surprising, or they are eating the $2,625 in an effort to push their electric vehicle offerings. This to me would be equally surprising, so I really don’t know what the truth is at this point, but I will continue to investigate this


So that's my question. What's the real deal. I'm with you, jmueller, I think they are pocketing a third of the money, but they deny it. What's the truth? Are we to believe that only BMW gets $4875 and everybody else gets $7500? Or that everybody gets $4875 but tries to be Mr. Nice Guy and pass on more and doesn't even claim credit for being nice? Or BMW is subject to different rules? or what?

 

[twscrap]

So that's my question. What's the real deal. I'm with you, jmueller, I think they are pocketing a third of the money, but they deny it. What's the truth? Are we to believe that only BMW gets $4875 and everybody else gets $7500? Or that everybody gets $4875 but tries to be Mr. Nice Guy and pass on more and doesn't even claim credit for being nice? Or BMW is subject to different rules? or what?

Not sure we'll ever know the answer to this.

 

[michael]

I very much doubt that's the case. The owner of the cars is BMWFS. I can't imagine they making so little money that they can't use all that tax credit. But even if so, their tax problems are not their customers' problems. They should get better tax lawyers if they are throwing away this money.

C'mon BMW....just tell us the details and we will believe you.... I am very unimpressed with BMW's handling of this issue. The money in question represents $100 per month extra cost to the customer on a 24 month lease.

 

[twscrap]

I very much doubt that's the case. The owner of the cars is BMWFS. I can't imagine they making so little money that they can't use all that tax credit. But even if so, their tax problems are not their customers' problems. They should get better tax lawyers if they are throwing away this money.

C'mon BMW....just tell us the details and we will believe you.... I am very unimpressed with BMW's handling of this issue. The money in question represents $100 per month extra cost to the customer on a 24 month lease.

Or you could just buy the car with the Owner's Choice financing option that is set up exactly like a lease so you do get the whole $7500. It's what we did.

http://www.bmwusa.com/Standard/Content/FinancialServices/BMWiFinancing/FinancingProducts.aspx

 

[michael]

Owner's choice is disadvantageous in California. Here, you would get stuck with sales tax on the entire price of the car (since you are actually buying it), not just on the sum-of-payments (which is the case on a lease). Plus, it is the buyer's problem to get the $7500 from the IRS and may take up to 15 months. In a lease, the leasing company deals with that aspect.

But...I'm still waiting to hear where it is written that BMW only realizes $4875 instead of $7500. If it's in the tax code, should be straightforward to point it out.

Just askin'...

What doesn't make sense about the whole thing is BMWFS created a whole new financing option where you own the car but it is structured like a lease. That way you can get the $7500 credit. As a result, almost no one is actually leasing, they're opting for the 'Owner's Choice' financing to get the $7500. If BMW is in fact just pocketing the $2625, why would they go to the effort of creating a financing option that circumvents the problem and effectively eliminates the possibility of anyone leasing an i3? Seems like a whole lot of effort for no gain if they are getting $7500 in tax credit for the leases.

I think I found the answer to that. It's a good question.

Owner's choice is not particular to the I3. It's generally available across all models. It exists because in certain states (Texas and Illinois are mentioned as example) when you lease, you get stuck with sales tax on the entire value of the car. Then, if you decide to buy the car for the residual at lease end, you have to pay sales tax a second time on the residual. In effect, you pay sales tax 1 1/2 times. Owner's choice avoids this.

So its purpose is not related to the 7500 vs 4875 that is particular to the I3. It's a strategy to improve lease costs in certain states.

Owner's choice with flex I think is particular to the I3.

 

[brogult]

But...I'm still waiting to hear where it is written that BMW only realizes $4875 instead of $7500. If it's in the tax code, should be straightforward to point it out.

Just askin'...

Corporate taxes are not simple!

One possibility is that this is simply the result of double taxation of a subsidiary. If there was a leasing company operating as an LLC, but electing corporate tax treatment (very commonly done, known as the 'check the box' election, see Form 8832), then all of their General Business Credits (see Form 3800 Line 1Y) would add to their bottom line--just as any expenses, including taxes, come off that bottom line. Therefore, although the Lease Co LLC would not pay taxes on the credit, their parent corporation would pay taxes on the increase in the bottom line, at a rate of 35%.

$4875 is 65% of $7500, or in other words, $7500 minus the 35% US corporate tax rate is $4875.

Real world tax situations are much more complicated. I have no idea what BMWNA/BMWFS actual structure is or how they figure their taxes. But their story is not implausible.

 

[hybridbear]

Here's a hilarious Chinese knock-off of the i3.
http://www.digitaltrends.com/cars/qingzhou-da-jinma-jmw2200-official-specs-and-pictures/

 

[Rogerschro]

Here's a hilarious Chinese knock-off of the i3.
http://www.digitaltrends.com/cars/qingzhou-da-jinma-jmw2200-official-specs-and-pictures/

Perfect for those golf outings!