There's a known bug that will report over temp on m54. It happened to me twice. I knew it was an error the first time becusse it was about 10F ambient and I only was ten minutes into my drive. I put my hands on the upper hose and it was maybe 140F.

I cycled power to the engine and there computer reset and showed the dash temperature simulator in the blue zone not even warmed up yet.

Since you power cycled the engine and ECT still shows high after I think you're on the right track to replace the sensor.

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2011 E70 • N55 (me)
2012 E70 • N63 (wife)