[seniorcitizen]

Typically I purchase cars and hold on to them for a long time.
I am strongly considering getting X5 45e.

I read a consumer report article saying that we are better off leasing a hybrid as technology is rapidly evolving so we are better off leasing it.

Buying will give me $7500 federal tax credit. I will also be able to take advantage of Section 179 deduction when cars are purchased for business.

I will pay cash for the car if I purchase it. So I am not looking into leasing to reduce my payments.

The only reason why I am still considering leasing is because I am concerned that due to rapid improvements in hybrid tech it will be difficult to sell my car or it will depreciate in value. Has anyone looked into resale value of previous generation of X5 hybrid? Did it deprecate or become undesirable once the current model was released.

I am hoping folks have faced similar dilemma and I can benefit from their decision making process.

[Caramel]

"due to rapid improvements in hybrid tech it will be difficult to sell my car or it will depreciate in value" - this will be true for any car: combustion engine, electric and hybrid. If someone takes battery tech to the level where a car can either go for 1,000 miles on a single charge or be fully recharged in 5 minutes, then why would anybody want today's combustion, electric or hybrid tech?

If you are that concerned about uncertain depreciation trends, then leasing seems to be your only option.

[Spencer518]

The residual % for lease of the 45e is the same as the 40i, so it seems that BMW doesn't expect them to differ much in depreciation.

[eddiehaug]

I don't know how it is in the US, but here in Norway I was offered a leasing with 50% depreciation + interest, after 4 years and 100K Kms or ~62000 miles.

[jad03060]

Some models depreciate more than others. The only way around that is to keep the vehicle for a long time as it eventually levels off. I considered leasing mine, but ended up buying for two reasons, BMW at the time was giving an extra $2K off when financing (I expect to pay it off fairly soon, but the rates were pretty good), and you can then get the US federal tax credit which isn't available if you lease. So, those two things, even if I don't pay it off early (had the money waiting for the purchase), I'd still come out ahead.

I don't put a lot of miles on my vehicles these days, so they don't typically wear out, or need much maintenance, so an 'older' vehicle isn't that big of a deal for me. I tend to average 8-years or so until something new entices me.

Some of it would depend on how much you expect out of the batteries. Most of my driving is local, and I can do the vast majority without using any fuel. When I do travel further, I like the idea of being able to refuel quickly, so the hybrid now with enough range for my local use triggered my desire for a new vehicle. If you aren't one that 'needs' a new vehicle fairly frequently, buying will end up cheaper. BMWs are not inexpensive to fix out of warranty, but they don't need all that much if you're lucky, so that's a gamble. Some want to always be within the factory warranty bubble, and then, leasing may be the better choice.

[TK421BMW]

I'm pondering the same thing for when my lease is up next year. I leased for the first time with my m40 since it was the first production run and was nervous. There's a couple things making me want to lease again, especially with the hybrid.

1. We've been making cell phones for decades and battery life still isn't the same after 2 years. Why would it be different for a car? Replacing cells after some years sounds like is very expensive.

2. Cars are basically becoming iPads/computers with motors (electric and/or gas). As technology keeps changing will we be able to keep cars long and still have the same usability? Ex, they way tech is changing, will a 2025 iPhone be able to connect to a 2019 car? Maybe... Will there be changing laws for autonomous driving which will make the system in my 2019 illegal and so BMW will disable it unless I buy some upgrade costing thousands? Would be like using a 10 year old laptop to connect to modern sites. All hypothetical, but you get the idea.

Just my $0.02

[rmorin1249]

If you can deduct your entire lease payment as a business expense seems that would be the best option but if you plan to keep it for longer than 3 years then leasing is probably not an option. Actual depreciation on almost all BMWs is atrocious but the residual BMWFS puts on them makes leasing attractive for those that like a new car every 3 years.

[jad03060]

1. My i3 is over six years old, and the battery has only degraded slightly. That's one reason why the computer doesn't charge it fully, or let you discharge it fully to keep it in its happy zone. It also has liquid cooling to keep things within acceptable range...something your cell phone does not. Once it detects the battery is charged, it disconnects the incoming power, so it's not sitting with charging voltage connected constantly. IOW, it's smarter and more capable of managing the things. They still degrade. Depending on the market, the battery warranty is fairly long (8-years in the USA to maintain at least 70% of new).

2. I don't see this as a liability. As capabilities improve, you may really want a new vehicle with it. Having OTA software updates is new for BMW, so it will be interesting to see how they treat their existing customers with potentially adding features. In the USA, it appears that the rules governing adaptive headlights may change next week. It will be interesting to see if BMW will/can update the software to enable more functionality to the laser assisted headlamps that our rules have hobbled considerably from the capabilities when sold elsewhere.

[TXSchnee]

Once you have kept a car for 5-7 years, depreciation isn't that big of a deal. For what it's worth, I purchased my Cayenne E Hybrid, and have no reservations about it, could care less about depreciation, or the future battery improvements (seeing as how the LCI on the Panamera already has a larger battery, mine will be "obsolete" in about 2 years). Lastly, if you lease, the dealer should take the $7500 off "purchase price" as the dealer will then file for the credit, if they don't they are being shady.

[seniorcitizen]

I don't put too many miles on my cars.
I have a convertible for spring/summer/fall. It is 2007 Audi A4 Cab with only 44000 miles.
We don't take a lot of long road trips.
So primary use of the car is when whole family wants to go somewhere and my daily work commute during winter.
MN Winters can be cold and long.

I wanted to buy a car which provided better mileage because it is good for environment. Took a long look at Tesla Model Y and X. Could not stomach all the quality issues they are having. I wasn't following BMW closely so I was pleasantly surprised to find X5 45e. I have owned BMW's before so it was a no brainer to get a plugin hybrid.

I will place my order with in next week and share pictures etc when the car arrives.

Still leaning towards leasing.

Thank you all of your comments.

[SmartSaves]

I was also considering the 45e, but with the current unresolved recalls and two fire incidents I am not sure anymore. Waiting to see the fix and more details.

[popper]

I also keep my vehicles about 8 years and all above comments I agree with. I had a new Lexus GS350 2013 and was a garage queen...loved it but tech passed me by. Toyota is what it is. I purchased for the exact reasons you listed. Love it and spent $200 on proper cleaning supplies this weekend on Amazon from the Chemical Guys while it awaits an opportunity to go electric individual!

Make sure you have access at home to a level two power system, as charging 45e in public places on level 2 makes little financial benefit as far as I can tell so far.

Also, make sure you do the Performance Delivery if possible.

[GrussGott]

Originally Posted by TXSchnee

Lastly, if you lease, the dealer should take the $7500 off "purchase price" as the dealer will then file for the credit, if they don't they are being shady.

AFAIK, that's no longer the case; used to be though (and it wasn't the dealer filing but rather the leasing company, i.e, BMWFS but that's probably a minor detail)

Originally Posted by SmartSaves

I was also considering the 45e, but with the current unresolved recalls and two fire incidents I am not sure anymore. Waiting to see the fix and more details.

I'm in this same boat - on the one hand these kinds of things happen no matter the tech (my e9x m4 had an injector recall or something - BMWNA took care of it). Further if BMW doesn't properly handle the recall/stop-sale they can forget about their electrics business globally, so it seems like something they'll solve quickly (and probably not by pushing burning cars into the sea), and their larger concern is likely how to quietly solve it and manage the PR (i.e., is it big enough and probable enough to make a lot of noise or small and unprobable enough to make it an abundance-of-caution thing?)

So logically I'm not too concerned and will likely move forward ...

Still, I'm going to give it a few weeks ...

[W0ut]

I leased my 45e because depreciation concerns. Minimal down-payment and maximum residual value.

Owned a >58.000 euro 330d. Then diesel gate started. Sold it last year (4,5y/o 110.000 km) for 14.000 euro. Was the highest bid I got after 2 months.
Don't want that happening again.

I hear that there is almost no interest in used X5 40e vehicles.

Although the X5 45e has (one of) the largest battery packs and electrical range for a hybrid. I still believe that in 4 years it will be outdated and there will be no interest for it.

[SmartSaves]

Originally Posted by W0ut

Although the X5 45e has (one of) the largest battery packs and electrical range for a hybrid. I still believe that in 4 years it will be outdated and there will be no interest for it.

Well explained. I also think BMW won't have financial incentives to offer upgraded battery pack with more kWh and it is highly unlikely that they'll provide retrospective software support (OTA updates anyone? LOL). This is not ideal for long term owners, hence lease makes more sense - low down with high residual.

[moodyhank82]

I actually think the opposite. I wrote this on another topic too so repeating myself but I think when the car has the straight six turbo under the hood, the hybrid ability is only the icing on the cake. For an EV like my Tesla Model 3, the improvement in range will make a huge impact on resale in 3-5 years time for sure but for a hybrid that has a powerful combustion engine, it is not that big of a factor especially here in US where gas price is cheap and emissions unfortunately don't matter.

As for the lease vs buy decision, I am an avid leasing enthusiast to say the least but in my case buying the X5 45e makes much more sense. Here is my math:

MSRP: $70K
Dealer discount: $7k
APR rebate: $2.5k
OL Code: $1k
Corp sales discount: $1k
State tax incentive: $4k
Federal tax incentive: $7.5k
Net price: $47k or 33% off

Let's assume the car depreciates 50% over the next three years and I will sell it for $35k (just because it is a purchase, it doesn't mean one has to keep the car for more than 3 years) then my net cost of ownership over 3 years is $12k. Let's look at the leasing scenario:

For the bare bone 45e, BMW advertises $789 per month for 36 months with $5k down with $1250 dealer contribution. Assuming the same dealer discount % and BMW incentives as my purchase scenario, the cost of lease over 3 years is roughly $30k.

So at least in my case financing the 45e is approximately $500/month cheaper than leasing or put it another way unless the car depreciates more than 75% in 3 years, buying is cheaper than leasing. However, if you don't qualify for the same tax incentives and can write of the lease as a business expense then your situation will be different.

[GrussGott]

Originally Posted by moodyhank82

in my case financing the 45e is approximately $500/month cheaper than leasing or put it another way unless the car depreciates more than 75% in 3 years, buying is cheaper than leasing. However, if you don't qualify for the same tax incentives and can write of the lease as a business expense then your situation will be different.

Great post - I'm getting to the same conclusion for similar reasons ... if you take away the FTC and other incentives maybe it's a different story but with those incentives that gives you a ton of room to play with ...

Further, depends on when you plan to sell - if 3-5 years then I don't see much risk given the 6-cyl engine and 8 year battery warranty (in the US). It's not like BMW is going to undercut its own vehicle by then, and the competitors are all way behind right now in battery range, and people looking to buy a 3-5 year old used car are typically not cross-shopping new vehicles ... further if you're getting a new BMW, a dealer is going to take your trade-in - you may not do great, but the $10,000 incentives buffer gives you some room to play with!

I don't think you can compare a diesel (trending down) with hybrids (trending up).

[seniorcitizen]

moodyhank82,

Thanks for sharing the pricing you are getting in CO.

I had built a 2021 BMW X5 45e with these options
https://www.bmwusa.com/build-your-ow...2dyy9y/summary

This came to MSRP of $71,600.

I used Truecar to get quotes from local dealers that participate in MN.
Here is what I got from a local dealer who participates in Truecar/Costco Auto buying program.

MSRP $72,595 (I don't know how the price went from $71600 to $72,595)
TrueCar Sale Price $69,328 ( So this is only a discount of $3200 only)
BMW Lease Credit $500
Net Sale Price $68,828
Cash Down $2,500
36 month, 10,000 mile/year lease $998/mo., first payment due at lease signing.
Residual Value/Purchase Option Price at lease end $40,654

Are you getting $7K discount on 2020 or 2021? I am assuming that it is for 2021.
I do not know what OL Code is and what corp sales discount is. I will try to learn more.

MN does not offer any tax incentive as far as I know. Kudos to Colorado for offering it.

I am open to financing it for $2500 and plan to pay it off shortly afterwards.
If I can get a price anywhere close to what you are getting I will consider purchasing it.

[Finito84]

Well, you mentioned that you want to take the $7.5k tax credit and the Sec 179 depreciation ($70k or whatever the car cost as a tax expense).

If that is the case and you want to increase significantly your expense for 2020 purposes, then, buy the X5 and have it delivered by the end of the year.

The lease will reduce your taxes only on the lease expense, so only a couple of months of lease expense.

I understand that the 45e is relatively new and new products might have issues, but it has been already been tested in Europe for a year.

Agree that there might be battery recall or similar items, but I think considering tax credits (around 10% just federal tax) , % msrp discount (around 8% might be reasonable) and incentives (depends 0% to 4%). You might have around 20% discount. Additionally if you can do a section 179, it will be whatever your effective tax bracket is. Let's suppose your tax bracket is 20% or higher. Getting a total discount of 40%, in my example, is not bad. It is probably much higher tax bracket for some bmw clients.

It is a great deal compared to the X5 40.

[moodyhank82]

Originally Posted by seniorcitizen

MSRP $72,595 (I don't know how the price went from $71600 to $72,595)

Are you getting $7K discount on 2020 or 2021? I am assuming that it is for 2021.

I do not know what OL Code is and what corp sales discount is. I will try to learn more.

I am open to financing it for $2500 and plan to pay it off shortly afterwards.

Some quick answers:

- Your price went up to $72,595 because $71,600 is before the $995 destination fee

- I am getting 10% off for a custom build 45e (there is no MY20 45e for the US market). I have helped some forum members get the same discount from my dealer though that was for the month of September. They said in October they won't be giving the 10% off to my referrals. There are other forum members reporting discounts in the 10% range in other states so it is doable if you shop around (potentially out of state) and find the right dealer.

- OL code is a discount from BMW for participating a sales event that took place last month. You can also attend ultimate driving experience (UDE) events and get the same $1k OL code

- Corp sales discount is offered by BMW for employees of certain companies/organizations. If you don't qualify for it, you might have other alternatives like the loyalty or conquest rebates that cannot be combined with the corp sales incentives

- BMW is offering 0.9% financing for the 45e this month so even if you have the cash to buy the car, it might make more financial sense to finance it at that rate assuming you can find an investment that offers greater than 0.9% annual return

[GrussGott]

Originally Posted by seniorcitizen

I used Truecar to get quotes from local dealers that participate in MN.
Here is what I got from a local dealer who participates in Truecar/Costco Auto buying program.

Truecar may not be the best way to do it - you might consider getting some email quotes from around the country from dealers more willing to give discounts and then hit up, say, motorwerks in bloomington if you need to stay local. Reportedly the dealer margin on 45e MSRP is 7% (some say 7.5%) and so in that 5%-7% range seems to be average with 9% or more usually requiring financing the minimum (7500?) and probably using an out-state dealer.

e.g., In my experience in an average offer dealers will offer $500 over dealer invoice by which they mean that 7% number. It's fairly easy to find dealers in that range, but - again, in my 45e experience this month - you'll need to buy from outstate (and use courtesy delivery) to find something higher than 7%.

For me, i'm willing to pay more for someone local with good service who knows how everything works - that's rare enough for me to find that i'll pay for it!

[W0ut]

Originally Posted by moodyhank82

Let's assume the car depreciates 50% over the next three years and I will sell it for $35k (just because it is a purchase, it doesn't mean one has to keep the car for more than 3 years) t

When looking for a lease for my X5 45e. I contacted 4 leasing firms here in Belgium. None of them allowed a residual value of more than >30% on 4 years (one even 25%). That is 28.000 euro for a 93.000 euro car.

In the end I went for the BMW financial offer because they allowed a higher residual value (35%) and didn't require an anti-theft system to be installed (2 leasing firms required this)