Here’s Why BMW i3 Sales Shot Above Expectations In August In US

3 years ago by Eric Loveday 23

2014 YTD/August Sales Chart (*Estimated Tesla NA Sales Numbers – Reconciled on Quarterly Totals from Earnings Report (Q1 Sales reported @ 6,457-3,000 Intl Delivers, Q2 7,579 total-approx reported International registrations) *Fiat 500e data estimated for Jan/Feb)

2014 YTD/August Sales Chart (*Estimated Tesla NA Sales Numbers – Reconciled on Quarterly Totals from Earnings Report (Q1 Sales reported @ 6,457-3,000 Intl Delivers, Q2 7,579 total-approx reported International registrations) *Fiat 500e data estimated for Jan/Feb)

BMW i3

Hundreds Of BMW i3s At Port Awaiting First Deliveries Some 2-PLus Months Ago

Prior to August, sales of the BMW i3 were below expectations in the U.S.

In May, June and July, BMW had sold no more than 363 units in a single month.  Additionally, there seemed to be little indication that sales would grow.  However, that all changed in August when i3 sales checked in at a shocking 1,025 units.

This set off a string of articles around the web, all of which focused on the BMW i3 outselling the Tesla Model S (whose factory started the month shuttered while the company delivered produced cars internationally).

Well duh, right?  Besides that, a typical Model S costs twice what a typical i3 does and has a global retail network in place, so really the i3 should beat the Model S in sales each and every month.  If it doesn’t, then BMW should be concerned.

Back to i3 sales.  Prior to the stellar August, we were wondering what was up with the low i3 sales.  We reached out to Tom Moloughney, a BMW i3 owner with connections to several higher-ups at BMW NA for a response.  Here’s his response in its entirety (note his response is now a few weeks old):

 “I think you need to first ask the question “Are they below expectations?” and “who’s expectations?”

“I suspect the public’s expectations are likely different than BMW’s. I think BMW didn’t expect US sales to be more than 4,000 in the first full year. Back in January at NAIAS BMW NA CEO Ludwig Willisch said that he expects US i3 sales will be “a couple thousand” in 2013, so it would seem sales aren’t below BMW’s expectations”

“That being said, I personally expected the first full year US sales to be in the ~5,000 to ~6,000 area and for that to happen the sales would need to increase significantly. I don’t see that happening unless the lease rates become more attractive. The car is expensive to begin with, and I’m not saying it’s overpriced, because I don’t believe that is the case, it’s just an expensive car because of the extensive use of carbon fiber and aluminum, as well as the other tech in the vehicle.”

Old BMW i3 Lease Quote - Originally Posted on InsideEVs.com

Old BMW i3 Lease Quote – Originally Posted on InsideEVs.com

“When you start out with a car that is priced between $42,000 and $56,000, then offer a low residual and on top of it only offer $4,875 of the $7,500 Federal Tax credit as a discount, what you have is are very high lease rates. Most people today want to lease electric cars because of the uncertainty of where the market will be in three years when they would like to move on to another vehicle. I have had dozens of people reach out to me through my i3 blog asking to explain the high lease rates”

“Many have said they were anxiously awaiting the i3 and were completely sold on getting one but once they got the leasing rates from their dealer they are walking away disappointingly. The OwnersChoice with Flex was created specifically for the i3 and was developed to allow the customer to get the full $7,500 federal tax credit. However most client advisers are confused about how it works. I know one person that had to go back to their dealer five times to sign new contracts each time because the dealer couldn’t figure out how to properly fund an OCF contract. Plus, since it’s a purchase, the customer has to pay sales on the full purchase price, not just on the amount of time the car is used as you do with a lease. This added sales tax nearly eliminates the advantage of getting the full $7,500 federal tax credit.”

“Then there is the rocky launch to consider. BMW struggled to get the information people were seeking out there and the dealers were really not ready for the questions they were getting. For example, I’m getting an onslaught of questions about the range extender on a daily basis now. I don’t think BMW has been able to properly communicate how it works, what are the limitations, and what you can and cannot do with it so many people are just a bit confused about its real utility.”

Current BMW i3 Lease Offer

Current BMW i3 Lease Offer

“I think there are a lot of people that were fully expecting to get an i3 now find themselves waiting a bit to see if the lease rates improve, and to also get more information on how everything works. The i3 is attracting a lot of people that have never owned an electric vehicle and aren’t necessarily sophisticated “EV experts” like we see in the forums, and on sites like InsideEVs. These people need a bit more information and reassurance that they are indeed making a good purchase. If they can’t get that reassurance from the dealer or directly from BMW, then they will either hold off until they can get the information they seek, or they will simply walk away.”

“I bought mine outright and have 5,500 miles on it so far. I’m very happy with it and think it’s a great EV. I think it fits in very well between the LEAF and the Model S, and is different enough in utility, driving experience, technology and price from either of them to fill a niche that neither of them do, even though there is certainly some overlap. Both the LEAF and the Model S are great EVs in my opinion and may even appeal to a wider range of customers than the i3 does in fact, but I definitely believe if BMW were to offer a better lease rate, and improve the information available they would certainly see an increase in sales.”

Notice how Tom mentioned leasing on several occasions?  That’s the change that BMW made and it did, as Tom predicted, result in improved sales.  However, it took awhile before the general public was made aware of the new lease rates, which are as follows (note: some regional and local discounts will reduced rates even further):

BMW i3 Lease

  • $499 month (w/$2,950 down) 36 month lease on base BMW i3 ($41,350)
  • $549 month (w/$3,460 down) 36 month lease on base BMW i3 REx ($45,200)

So the lease turnaround did occur and sales went way up, but we don’t expect them to hold at 1,000 units per month.  i3 inventory in the U.S. is still high, so sales may be in the 1,000-unit region for a few months, but at some point in time we think sales will stabilize in the region of 500-600 units per month.

Notice in Tom Moloughney’s statement how we bolded rocky launch?  Officially, BMW believes that characterization is completely wrong.  Look for us to present a future InsideEVs article on the so-termed rocky launch, including BMW’s take on the situation, as well as an explanation on how BMW is addressing the situation.

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23 responses to "Here’s Why BMW i3 Sales Shot Above Expectations In August In US"

  1. Teslaman says:

    The lease only allows 30K miles in 3 years and $0.20 after that. Not that great of a lease. Even the finance offer is crap, 2.99%, my credit union is offering 1.49%.

  2. DaveMart says:

    Ramping up production for their CFRP bodies is tough to do, and BMW are to be congratulated on doing it successfully.

    Costs are going to go down over time, and the benefits of the low weight give them an advantage.

    I think this will sell well in rich places with increasingly tough anti-pollution regulations and narrow streets.

    London epitomises this, and I think this will be the town car of choice in Knightsbridge.

    The big time for the i3 starts in a couple of years or so, when better batteries become available, and by which time it may be joined by a big brother i5.

    1. See Through says:

      How’s the i3 doing in UK? Mitsubishi Outlander PHEV seems to be the favorite in UK.

      1. DaveMart says:

        The i3 has only just gone on sale, so it is too early to tell.

        If a new car is popular it is quite often difficult for dealers to get hold of enough rhd models anyway, for some time.

  3. JRMW says:

    All the EV and PHEV sales suffer now given the rapid change of battery technology… It makes buying a gamble.

    I am a person who only buy cars in cash. I never finance or lease. But even I was thinking about leasing an EV instead of buying based on battery issues.

    All the more reason to get a 150-200 mile range battery on the market as soon as possible. It’s a huge deal getting stuck with a degrading 80 mile battery, especially here in MN.

    A degrading 150mile battery isn’t as big of a deal.
    ====
    I personally loved the i3. I loved the exterior. I liked the interior although I thought the dashboard was a bit odd. I liked that the Range extender was optional.

    Overall it was peppy and super fun, even though BMW crippled the US version for CARB issues.

    The big misstep I saw was that it was RWD (I know that RWD EVs are as good as FWD ICEs in theory, but you’ll never get Minnesotans to believe it), and I would have liked them use that low weight to advantage, and push the envelope to 120+ miles EV range.

    1. DaveMart says:

      I got stick when I suggested leasing instead of buying in the early days of EVs.

      Apparently it is less common in the US than in the UK, and even somewhat frowned upon, although I can’t personally see much difference to financing otherwise.

      I think Arizonan Leaf purchasers may have since re-evaluated.

      I think the BMW will be fine though, and really has mainly its somewhat odd styling going against it.

      1. Dr. Kenneth Noisewater says:

        Leasing makes sense:
        * when you have a better place/higher yield to put the money you’d otherwise be sinking into the purchase
        * when you believe the used value of your vehicle will be lower than the residual
        * when the lease terms and costs fit your driving profile

        For EVs, especially in the first generation, leasing is probably the way to go for most people, since many of the residuals were set pretty high, and not everyone could get all of the $7500 subsidy back on their own tax returns. For me though, 1.55% fixed rate was better to much-better than lease money factors, and I did get to take all $7500 off my taxes.

        1. nate says:

          Besides working out if the used market is lower than your residual, it can also work out if the used market is higher than your residual, as buying out your residual can be a good option. Of course, that is only the case if you analyzed the lease cost in the first place. Many people are don’t look at their loan amortization charts from their best finance offer, compare their lease end residual price and factor in their payment difference and savings rate to compare the cost of purchasing options. If you don’t analyze both options you really don’t know your best deal.

    2. Rob Stark says:

      Any lost sales in snow country because it is RWD is more than offset by gains in temperate areas because it is RWD.

      Facts, time , and experience will eventual convince the skeptical. Even in Minnesota.

      I live in Los Angeles and I wouldn’t buy a FWD car in less there was no option in my price range.

      I had a few company cars that were FWD. Never actually bought one.

      1. Dr. Kenneth Noisewater says:

        Plus, the big win for FWD and traction is in having the big metal lump and related components in the front sitting on the drive wheels. In the i3, the small metal lump and related components are on the drive wheels.

        Of course, having a second motor in front with taller gearing would be good, and I’m not a fan of the proprietary wagon-wheel tires vs having choices (and lower prices) with a standard wheel formfactor.

  4. leafer says:

    There is still no credible explanation from BMW NA concerning their passing only $4875 of the $7,500 federal tax credit. Combine that with poor residuals(recently improved) and low mileage allowances, and dealers who don’t fully understand OCF. I am a prospective buyer and drove the I3 for 2 days recently, but i’m still not sold. The rear door setup alone knocks the I3 off many buyers list. I did enjoy the acceleration, esp from 0-30!

    1. Josh says:

      I was told by a BMW sales rep that $4875 is the tax credit the leasing company gets, $7500 is only for a personal tax credit.

      Not sure if it is true, but that is how they were justifying it.

      1. evnow says:

        Not true.

  5. pjwood says:

    So, in short, “lease terms” are most attributable to the near tripling of sales.

    I got so many emails from the local dealer that, of MB, GM, Tesla and BMW, they were the only ones I had to reply “stop” to. So, I think reaching out more, during August, may have helped

    I finally test drove it, last week, and kept thinking about how there’s no way on earth the tires were about to reveal the virtues of CFRP. At least they can be changed. A car with a totally different mission. Sorry, but how could they not have done what they did to it, to limit sales? The narrow targeting just seems so deliberate. -biting tongue.

  6. David Murray says:

    Here’s what I can’t understand. When we leased our 2012 Chevy Volt it had a price tag of $45,000. So basically the same cost as a BMW i3 Rex. But we were able to lease the Volt with zero down and $330 per month. So why are the leases so high on the BMW?

    1. Josh says:

      GM rolled in the full $7500 tax credit (not $4875) and put some ridiculous residual values at the end of the lease. Some were as high as $30k, IIRC.

      So you were only buying about 10k worth of vehicle (after TTL).

      1. Mike says:

        From a start point of $45,000, $31,000 doesn’t seem high, it seems Honest.

        Good Dealer.

        1. Josh says:

          The dealer doesn’t set the residual, the leasing company does (Ally in this case). It is great for the customer, but it is terrible business for the leasing company.

          There are no 3 year old used Volts worth $30k. So they are taking a $5 – $10k hit on every lease vehicle that gets turned in.

          1. See Through says:

            So who subsidized the Volt deals? GM or the Ally bank? If th ebank, why did they do that?

            1. DaveMart says:

              It will have been the manufacturer.

              Notions that the Volt was anything but a loss leader for GM are incorrect.

              They hope to fix that with Volt II, but the losses on the first version are no doubt why they are only going to put Volt II on limited release.

          2. George B says:

            Yes, this is true. What is little understood is that GM does not offer a $7,500 lease rebate. What they do instead is a higher residual. This has two advantages: the customer does not need to pay sales tax on the lease rebate, and when the leasing company takes a loss on the vehicle because of its lower than projected residual value, they have a paper loss to write off on lease rerurns, in addition pocketing the full federal tax rebate. It appears to be a very clever scheme, which is completely lost on the initiated.

  7. Grant Gerke says:

    A BMW spokesman at the 2014 EDTA conference admitted as much, the rocky rollout at dealerships.

    1. Jerry says:

      I really don’t know how anyone could deny that Grant, even BMW employees. The poor launch certainly didn’t help initial i3 sales.