Depreciation Gut Punch - 2014 BMW i3 Long-Term Road Test

Edmunds.com

Depreciation Gut Punch - 2014 BMW i3 Long-Term Road Test

We took our 2014 BMW i3 to CarMax and received a ridiculously low offer.

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bankerdanny

The problem is that even for an electric the i3 is kind of rich person's toy, and if I were a rich person my electric toy would be a Tesla.

Why would I spend $30k on a used i3 vs $30k on a brand new Prius or if I was set on an electric, $20k for a used Leaf?

longtimelurker

And it has only around 11,000 miles on it. Whoa. If it had 20k on it like all their other LT cars, they would be taking an even bigger hit.

The only way to get value out of an EV is to buy it with the credits, then keep it for a long time to leverage both the low per-mile cost of EV operation and the probable low maintenance/repair costs of a vehicle like this that mostly runs on the battery rather than the engine and uses regen to slow down rather than cutting into brake pad and rotor life. The day-to-day operating costs are going to be a fraction of those of any other $50k BMW.

If this car fits your lifestyle, you drive the best bargain you can upfront, make sure you have gap insurance for the interval where you will be upside-down and just run it forever. Will there be advances in battery technology in the meantime, that you will have to forego? Yes...but it's like any other EV - the cost per mile improvements are going to be infinitesimal. Not like going from a 15-mpg SUV to a 20-mpg SUV, where you are going to see huge reductions in your cost of operation.

The predicament Edmunds finds itself in here is more product of their LT format than an indictment of the car itself, I would think.

stever

Part of it could also be weakness on the sales front. We've been hearing in the forums for the last couple of years that CarMax's trade-in offers aren't as sweet as they used to be.

"CarMax's fiscal third-quarter results were unexpectedly weak." (fool.com)

They've also lost a ton of money fixing that Range Rover that belongs to that Jalopnik guy.

One little pop in gas prices and the resale would pop up too though.

kirkhilles1

Wow. Yep, looking at Autotrader and I see an example with Range Extender and original MSRP of $50,700 with 14,000 miles on it listed at $25,800. Of course with gas prices at about $1.62 around my area...

Mr_Shiftright

Just goes to prove that dealers don't set the market, nor do price guides, nor do sellers. It's buyers who decide what a car is worth, and it looks like they have voted.

carguydaryl

yeah EV's are a heck of a bargain on the used market. There was an acura dealer here in Reno that had 2 Nissan leafs with under 25k miles for 11,900 and 12,900 not too long ago. Too me that's when an electric car make sense. If I actually had to commute in my own car (didn't have a company truck) I would totally have bought on of those to put around town in (its hard to drive 70 miles a day around here back and forth to work)

nate001

Is this the highest depreciation you have seen with one of your long term cars. what was the lowest?

kirkhilles1

I think the problem is that its not your typical $50k vehicle. It looks... funky: it doesn't look like a BMW. It doesn't have the performance of a Tesla or a V8. I'm sure the materials are nice and there are a lot of good things about it, but it really seems to be more similar to a Leaf than it does to a Tesla or an i8.

mfennell

My local NJ dealer is offering $9500 off sticker on their i3's w/range extenders. Add in the tax credit and the net is $33k for a brand new car.

throwback

Not really surprising. EVs have terrible resale values. I'm sure most folks will point to the cost of gas, but as a finance services guy I think the issue is the federal rebate. The MAIN selling point on new EVs is the tax credit from the Feds and the states. Used EVs do not give you that benefit. You have really want a EV to buy a used one.

karhill1

It is not true depreciation that is a concern to most buyers. Depreciation is an accounting concept which attempts to spread the cost of an asset over its projected useful life. For example, a $24,000 vehicle may have a five year useful life and a residual value at that time of $4,000. The depreciation using straight line would be $4,000 a year ($24,000 - $4,000 divided by five years). Therefore, the depreciated value of that vehicle after one year would be $20,000 after one year, $16,000 after two years, $12,000 after three years down to $4,000 after five years.

It is the value of the vehicle which concerns buyers. For that $24,000 vehicle, the actual trade value (there are many such as private sale, trade value) of the vehicle may be only $16,000 and the private sale value may be only $18,000.

At any given time, the depreciated value of a vehicle will not likely be the same as the actual value of the vehicle.

schen72

Very interesting how the economics of owning an electric car seems vastly different than traditional ICE cars. My personal stategy is to be buy reliable cars and own them until they fall apart. I'm mid-40s and still own my first car bought after college. I've only ever bought 3 cars in my life, and still own all of them. Not sure my model will work with electric cars.

tom_in_mn

It's all about the price of gas. That was the explanation from the Hnoda dealer that bought my Dad's hybrid Accord, one that a few years ago was hard to find, will now sit on his lot a long time before it sells. So unless you can wait for the next gas price spike you are going to have to take the loss.

gslippy

Doesn't surprise me one bit. My 12 Leaf's MSRP was $38250. After my 3-year lease was up, it ended up on a used car lot listed for $8998, and probably sold for $8000. That's 80% depreciation in 3 years, 70% even if you deduct the EV incentives.

Umm, who's going to fix the Edmunds TMV calculator, which is always wrong? It's an in-house tool; is everyone afraid to challenge it?

Back to CarMax - so much for no-haggle pricing. Even they know they can't move EV paperweights. I see they have 5 cars just like mine listed in your area for around $12k, which is about $4k too much. They'll come down.

ocjack

The reality of EV, at least for CA, is an automatic $10k reduction in value due to fed/state rebates. Plus here's another bottom line, how many people really purchase the '12 LEAF mentioned by gslippy at MSRP? Not counting the current 2016 model, previously when I checked on TrueCar, true purchase prices were almost always $5k less than MSRP. So a buyer (not a lessee) most likely left the dealership paying $23k! You therefore can not start the depreciation calculation at $38k, you needed to start the depreciation calculation at $23k!

I'm a BMW i3 owner and I have never ever looked at my car as a $50k car. LOL!!! $50k? I'll save a bit more money and try to find myself a used Tesla S. My car's MSRP was $42k, my dealership discount brought it down to $36.5k, with state and fed incentives I left the lot with a $26.5k car. Let's take the article's $26k resale value for the i3 REX, and subtract $3.5k for my BEV model. oh no, my car depreciated by $4k in a year, how horrible! Except I have been driving a mid-20k state of the art car that I got brand new with zero fuel cost (with solar) and absolutely loving it. Seriously, ask around, how many i3 owners actually paid $50k???

craigo7

NYTimes had a good article about how dealers don't even know how to sell EV's - or want to all that much, as they are low in service needs where the profits can be had. Seems like the current crop of EV's are niche vehicles for a small segment of the market. I'm not surprised that the used car market for them is very small indeed - you're buying yesteryear's model in a segment with rapid advances being made. The only way to move that car is to discount it a lot.

gslippy

@ocjack: Edmunds paid $49,999 for their i3, whose MSRP was $54800. Assuming they received the $10k incentives you mention, that makes it $40k out-of-pocket. So in a year's time, they've seen 35% depreciation. Extrapolate to 3 years, and that's about the depreciation I experienced on a Leaf.

jray3

Only a gut punch if Edmunds forgot to collect their tax credits. EV economics aren't stupid-simple, but are simple enough. However, it is a shame that the sheeple haven't woken up to what a great bargain used EVs are. Early adopters keep upgrading, induced by crazy lease offers, and dealers aren't marketing the used cars effectively. Meanwhile, I've driven over 70,000 electric miles for under 2.5 cents per mile!