Need advice for a friend
 

A friend of mine is asking me the following:

"right now, my 2004 bmw 525i is worth 15,000.
5 years from now, according to kbb, it will be worth about 5,000 => loss of 10k
add 5 years of gas @ $4/gallon, that's $10k of gasoline = cost of keeping this car is 20k
add a minimum of $5k repairs = that's 25k cost of owning this car.

if i buy a nissan leaf now, out the door and of pocket $40,000.
sell the bmw at $15k = my cost will be $25k.
government tax savings and rebate 7500+2500=10K , => so getting this car cost me $15k.
value of car in 5 years (50%) = 20k. ==>that puts me in $5000 positive category!
so i make money out of thin air.

plus, no more smog check, inhaling gas fumes, and oil changes.

am i missing something?"

Any advice is appreciated.
Thanks

Can't see the new elec vehicle being worth 50% in five years. You would have to figure battery cost into it, and see where the vehicle is in the battery replacement cycle. Also, as long as those tax breaks and subsidies are around, the resale should be a percent of the net cost, not the gross cost.

It does cost something to run an electric, it isn't free.

You will still have smog, it will just be from other drivers. They will thank you, though.

Is the range sufficient for your friend's use? If so, it makes some sense.

Makes as much sense as eating at McDonalds because it's cheaper; what about the quality of the drive during those years? There's more to the decision than pure economics in my opinion. If so, I am positive a VW diesel will cost less or even one of the over 40 mpg vehicles Ford offers.

If the decision of what to drive is purely based on monetary considerations, I am sure used vehicles will also come out better, just not a BMW.

The 50% estimated residual value in 5 years is just an estimate and unlikely to hold true unless there's a rapid surge in demand over the next few years. Really, does anyone want to buy a "used test guinea pig?", the first year of all new electric technology? That's like buying a used 2002 E65 7er.

If your friend has a need to be economical, consider a Ford Fiesta, Ford Focus, or VW diesel. They'll hold their value better, be cheap to run, and be loads better to drive.

I agree... If he goes electric now, there is no way the car will have that value in 5 years, to add that electric will be alot better by then... Look at what BMW is doing with BMW i.
Untill then battery change time would come 100%.
The Ride quality just sucks of that. I don't think 525 would be much fun to drive, but at least It's got alot of comfort and looks.
Just Tell him to make decision from the point; how he is treating himself.

You can't figure in the cost of gas if you're not going to figure in the cost of electricity to charge it.

I thought that was free.


OP: tell you friend it is a good plan. Some people don't deserve to be BMW drivers.

Thanks for all the comments and advice!

Answering some of the valid points raised:

1. He has a sports car that he enjoys driving. Beats the 5series performance and handling.

2. Has solar panels installed = free electricity.

3. Eight year warranty on the Leaf which includes the battery.

Looks like his only concern is the range, which is about 70 miles on full charge.

Thanks again.

wow, that guy is all around efficency :D

I have two solar electric arrays...electricity is NOT FREE.

Just wanted to point out that fallacy...he brought the panels, there is a cost there...and any electricity he puts into the car is electricity the house cannot use. Unless he has 100% excess capacity and never uses grid power. Heck, even then excess power can be sold back to the grid in some states.

But seems like he will enjoy the leaf.