A while ago, my wife and I decided that our next car would have some level of electrification. Not a traditional hybrid, but either a plug-in hybrid-PHEV (which has some electric range) or a fully electric vehicle.
And then we entered Covid, where an opportunity presented itself to move that timetable up.
It’s been interesting to watch the automotive market during the pandemic. Yes, there was a huge hit to automotive sales in the beginning (March/April/May) as everything shut down, but the industry has bounced back considerably quickly, particularly in the luxury set. Automakers turned up incentives pretty quickly to try to sustain any sort of sales volume to help keep revenue rolling. It worked! Actually, maybe too well. Inventories were soon pretty depleted across the industry, especially since suppliers and factories were finding it tougher to open back up to help replenish those inventories. Dealer inventories are still pretty tight on many cars.
What does this have to do with our going electric? It has to do with our outgoing car. We had leased a 2019 BMW X5 xDrive40i (that’s BMW speak for the 6-cylinder all-wheel drive X5) early last year. Typically, BMW leases are pretty aggressive, meaning they’re priced for a fairly low monthly payment, making them attractive to many shoppers. They do this in a multitude of ways (something we’ll deep dive into in a future post!) including boosting the lease end residual or forecasted resale value.
While nice for low lease payments, it can typically make jumping out a lease before the end financially difficult. There would typically be a big negative gap between the car’s trade in value and the payoff/buyout on the lease. However, low inventories, for new and used, started to lift values, as demand remained high.
I looked at our lease buyout value online and started to keep track of potential trade in values. While I could try to sell the X5 private party, that’s a bit involved. Could also look to transfer the lease to someone, but that could potentially take a while as well as that person needs to apply and get approved through BMW Financial. I thought if I could find a trade in value that wouldn’t be too negative, maybe we could swap out and get into something else.
At the same time, I started looking at… what could we get? We loved our X5 and BMW just released the 2021 X5 xDrive45e (again, BMW speak, this time for their new plug in hybrid). So we could keep something familiar and achieve our wish for electrification. The X5 PHEV has a pretty substantial 31 mile electric range, far above the current Volvo XC90 (just 18 miles) and the Lincoln Aviator PHEV (21 miles). Audi recently debuted a Q5 PHEV with 20 miles of range but it’s a bit tighter size wise than we’d want, more akin to the BMW X3 and Volvo XC60, which also have their respective plug ins.
After speaking with our BMW dealer, they indicated that the deal we got on our X5 would be hard to replicate on the new plug in. BMW wasn’t, at the time, providing any of the federal rebate pass through on the plug in lease as you typically see manufacturers do. So it would be a substantial payment bump to go into a new X5 PHEV. That didn’t really seem worth it.
In my research, I started to hear rumblings of some incredible lease deals on Audi e-trons. There were plenty of leftover 2019 model year e-trons, this is in September of 2020 when we typically see 2021 model year vehicles coming out. With my estimates and calculations, I figured that we could get a 2019 e-tron Prestige for LESS than our X5. This would be despite the nearly $10,000 higher sticker price on the e-tron than our X5. Making this possible was a full pass through from Audi Financial of the $7,500 federal tax credit to reduce the vehicle price, hefty potential marketing allowances that were available to dealers, as well as dealer discounts. So we had our target.
Emailed a number of local Audi dealers that had vehicles in stock in colors that we would be willing to take and laid out the deal we were looking for, basically a max discount offer with full pass through of the marketing allowance, additional dealer discounts, etc.
While waiting to hear back from that side of the equation, I got to work on firming up a potential sale/trade out of our 2019 X5. While in the past, CarMax was the only typical source for a consumer to be able to offload a car easily without having to buy a vehicle at the same time, there are now a multitude of options like Carvana, Vroom and even local dealers and national dealer groups that will provide offers on your potential vehicle sale. AutoNation has an easy online appraisal submittal, while 3rd party sites like KBB, TrueCar and Edmunds also allow you to shop your vehicle out to local dealers for bids. Through CarMax, our BMW dealer, Carvana and Vroom, I was able to secure at least one offer that was pretty close to a full buyout on our X5.
Back to the e-tron. One of the larger dealers near me hemmed and hawed a bit and in the end wasn’t willing to go that low on an e-tron deal. But one dealer a bit further out was quick in their communication and responses when I detailed my specific deal parameters. We had a deal! As one last element, knowing that dealers are generally in short supply of good clean used vehicles, asked if they’d match the top offer on our X5, so I could just do all the paperwork with one store, and also be able to drive there and drive the e-tron home without having to get my wife and daughter to come with. They confirmed a few items of the car through pics in text and confirmed that their sister BMW store would be able to match the offer. So that’s how we ended up being able to jump out of our X5 lease half way through it, with no negative gap to cover, and jump into a new (albeit 2019 model year) e-tron for a LOWER monthly payment. We also wouldn’t have to pay for premium grade gas anymore, which is starting to inch it’s way back up in price.
So that is our long story of how we made the jump to something electric. Coming up next… why not a Tesla?
