Why a used 2015 i3 is so uniquely priced.

The value of the 2015 year model i3 is unique and we may not be seeing a similar effect in future years. Surely BMW i3's will always be "discounted" in one form or another b/c its MSRP is just priced too high to start with, but the values being offered on used 2015 i3's come from a combination of things all happening at once that may not repeat itself down the line. I could be wrong, but here are my thoughts (it'll be interesting for me to read this back 5 years from now):

1. Tesla.
People are holding off buying an EV b/c they think they want the Tesla Model 3 (that was me a month ago). Those that don't have it already are waiting for the base model to be released. When that happens, many people will realize they don't want it anymore b/c all the tax credits are gone. These would-be buyers will look for alternatives which will add to the demand on other vehicles, one of which is the i3.

2. There are a number of new EV's coming out.
This will only decrease demand for the i3 as consumers see they have more options than they once had. Once upon a time, the i3 was the fastest EV out there behind the Tesla Model S. That's no longer the case. The i3 also had one of the largest batteries. We see that's definitely no longer the case. And in fact, people are flocking to larger sized batteries thinking that's really what they want. Or is it?


3. Misunderstood consumers.
Wannabe EV owners want enough range so that they don't have to charge the car any more often than they get gas. Once they realize and accept that it's okay and preferred to charge it nightly, they'll recognize that they shouldn't be paying a premium for a larger battery which is less efficient, takes longer to charge, will cost more to repair/replace, and is of course exponentially more expensive. Consumers aren't going to be dumb for long. They'll come around and realize they don't really drive 200 mi a day and they'll be more accepting of vehicles with lower ranges. For now though, loads of people are craving huge range. The more the better. Until they get smart, the deals will stick around.

4. Consumer confidence will increase and leases returns won't come in such large numbers.
It's no secret that people lease EV's moreso than buy them. It was because of EV's that people started to lease for reasons other than affordability and excitement of switching cars regularly. Many first time leasors do so with an EV. Technology was growing so quickly and there wasn't a lot of confidence in batteries. Although EV's have been around awhile, it's still in its infancy. EV's haven't been around long enough to see a bunch of batteries fail to really know how long they last. As time goes on, people will get more confident in EV's and we'll see an uptrend in purchases over leases which will decrease the inventory of lease returns.

The i3 came out in 2014. Most people know to let the first year slide while the manufacturers work out the bugs. Huge number of leased 2015 models are being released into the market as lease returns. So much in fact that CPO cars are priced competitively with private sales. There's literally no reason to buy a non-CPO unless you found a Mr. Porter, Launch Edition package, Value Package, Value Package +, Shadow Sport, Carbon Edition or any other limited edition model.

5. That PG&E thing is temporary.
PG&E and Edison are/were both offering $10k off new cars. This incentive is making people think twice about buying used. Some people will bite on this offer, creating less demand for the used ones which further increases inventory relative to demand for 2015 cars.

If people pay less for a car up front, they're going to be willing to let it go for less when it comes time to sell (moreso than if they paid full price). When these 2018 models come back into the market as used cars, they'll compete with the other listed cars. I think we've hit our bottom for i3's still under the 4 year warranty (which is a big thing for consumers of EV's) as I've seen some i3's under $15k with MSRP's of $48k. I don't expect to see a spread like that for any other model year that's still covered by CPO warranties.

If you don't know whether you want an i3 or not or are comparing it to any other car, don't get the i3. It's not for you. If you are in love with it, you'll know it and the time to buy is now.

I think you hit it on the head with #2. There's a lot of competition out there now. And, as you say, the i3 is way over priced. IMO, that's why BMW will not make the i3 in it's current form (carbon fiber body, etc) beyond model year 2020. They'll have other EV's, but they won't be as expensive to produce as they are now.

We see some reports of BMW likely canning the i3 after 2020. I wonder what the effect will be on used pricing, if that were to happen.

Right now, one thing depressing all EVs is the rebates and credits you can get with a new one. So, say you're really lucky and live in a place where you can get $10K from the utility, maybe $3K from the state, and $7.5K from the feds...or over $20K off of the best deal you can negotiate...maybe $25K off an i3 with loyalty discounts and whatever else you may be able to negotiate. So, given 'typical' depreciation from the actual cost a couple year old vehicle would have to be quite a bit cheaper than one that doesn't have those perks to sell. WHy buy one with 'typical' depreciation levels when a brand new one with warranty is not all that much more? When you look at the out the door cost of a new one, to make a used one attractive, it has to be a fair amount cheaper. Given that the i3 should last a very long time, if you buy one, keep it if it meets your actual needs, and the depreciation starts to become much more tolerable. People want longer range, but many do not need it once they get familiar with the vehicle. Consider leasing if you think your needs will significantly benefit from longer range available in a few more years rather than buying. At least then, you will know your out of pocket costs.

IMHO, assuming the feds do not extend the EV credits, the prices of used EVs will start to look more 'normal' in a few years as those credits expire. Who knows about the states and utility ones...there is some incentive to keep them intact, but who really knows!

The other big thing is that EVs are still a very small proportion of the new car sales. There are, and probably will be for many years, a lot of misunderstandings on what they are and what they can do. Many people still think golf carts, or something like maybe a Smart that has trouble getting out of its own way. They have no idea of the public charging network or how to use it or the costs, either.

Srivenkat said:

We see some reports of BMW likely canning the i3 after 2020. I wonder what the effect will be on used pricing, if that were to happen.

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Normally, it would become a rarity and the prices would go up slightly. However, with the current misconception about low range vehicles and their utility, I don't think we'll experience prices going up on earlier model i3's. There are also too many new cars coming out to give the i3 as much attention. Even now, with the few EV's on the market, the i3 doesn't get that much attention.

As of the consumer market now, I'd be willing to say that a lot of EV buyers are trying to save money. It's not saving the world that gets people to buy EV's. We like to think we care about carbon footprints and all that, but I seriously doubt more than 20% of EV buyers end up with an EV for that as their primary reason. Assuming that's true, these EV buyers won't be looking at brands that are typically associated with high end and luxury and therefore pricey.

When I saw the i3 priced at $18k USD on youtube, I was completely shocked. I hadn't considered a BMW at all just thinking it would be way out of my price range. Although I did own a luxury vehicle and am very aware of Mercedes having the second lowest resale value of any luxury vehicle (behind Jaguar), even then, I still didn't look at BMW. BMW's typically hold their value so well in the used market. Complete opposite of the other luxury brands.

So because all eyes are on brands other than BMW to satisfy people's EV curiosity, the prices on the i3 drop "bigly". And with all the other stuff I said above, it's all a huge recipe for disaster for pricing on the i3. Tough situation, but we take advantage of it and here we are with almost brand spanking new i3's under 20k miles for around $20k give or take $2k depending on packages. It still amazes me that you can get a used i3 for the price of a Civic or Ford Fiesta.

As much as we talk about this, I still think the pricing of a used i3 is still a little known secret. We're so lucky to be here and have access to these vehicles. I'm dumbfounded every time I wake up and realize that I get to drive this everyday. The closest thing I can think of that's anywhere near this is when Scion first came out. Those cars were fully loaded with options only available to luxury brands at Civic prices and were included as standard! That was a game changer.

jadnashuanh said:

Right now, one thing depressing all EVs is the rebates and credits you can get with a new one. So, say you're really lucky and live in a place where you can get $10K from the utility, maybe $3K from the state, and $7.5K from the feds...or over $20K off of the best deal you can negotiate...maybe $25K off an i3 with loyalty discounts and whatever else you may be able to negotiate. So, given 'typical' depreciation from the actual cost a couple year old vehicle would have to be quite a bit cheaper than one that doesn't have those perks to sell. WHy buy one with 'typical' depreciation levels when a brand new one with warranty is not all that much more? When you look at the out the door cost of a new one, to make a used one attractive, it has to be a fair amount cheaper. Given that the i3 should last a very long time, if you buy one, keep it if it meets your actual needs, and the depreciation starts to become much more tolerable. People want longer range, but many do not need it once they get familiar with the vehicle. Consider leasing if you think your needs will significantly benefit from longer range available in a few more years rather than buying. At least then, you will know your out of pocket costs.

IMHO, assuming the feds do not extend the EV credits, the prices of used EVs will start to look more 'normal' in a few years as those credits expire. Who knows about the states and utility ones...there is some incentive to keep them intact, but who really knows!

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Start to "increase" to normal is what I'm interpreting your statement to mean as opposed to "remaining the same but perceived as normal". I'm thinking that b/c people who do get these incentives will be willing to sell their cars for cheaper than if they paid full price, the government incentives will in a sense continue the trend of depressed prices in the used EV market.

e.g. You buy the $55k i3 for $30k, you might be more willing to sell it for $15k vs if you actually paid $55k to start with.

jadnashuanh said:

The other big thing is that EVs are still a very small proportion of the new car sales. There are, and probably will be for many years, a lot of misunderstandings on what they are and what they can do. Many people still think golf carts, or something like maybe a Smart that has trouble getting out of its own way. They have no idea of the public charging network or how to use it or the costs, either.

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So true. There's a huge misunderstanding of EV's. The term and the cars are in people's faces so it's hard to ignore. People are exposed to EV's, but people aren't really educated about it. Like you said about the charging networks. Even I didn't know that much about it until I actually got an EV. It wasn't even until recently that I learned that my charging (that charges money by the hour) drops in half if someone pulls up and uses the same station.