My i3 REx. Will it now cost me $3,900 more than my contract calls for?

It what can only be categorized as a major misstep, BMW of North America has announced that the i3 with range extender is not tax exempt in the state of New Jersey as what was previously reported. Back on January 27th, BMW of North America manager of Electric Vehicle sales and strategy Jacob Harb told his client advisers on a conference call that the i3 REx would be treated as a zero emission vehicle in New Jersey, and qualify for the states Zero Emission tax exemption. That was big news at the time for New Jersey residents including myself, and was one of the final deciding factors for me to actually choose the REx version over the BEV i3.

"The sales tax exemption in NJ only applies to zero-emission vehicles--and as such, does not apply to the i3 with range-extender as it does not apply currently to any vehicle with an internal combustion engine."... "Any assumption that the i3 with range-extender would qualify was premature" 
Dave Buchko, BMWs product and technology communications


The misinformation was further reinforced at the BMW i3 dealer training event held at BMW headquarters in Woodcliff Lake in April when the client advisers were again told that the i3 REx would be sales tax exempt in New Jersey. Now that BMW has begun delivering i3s with the range extender in the State since last week, the dealers havent been collecting sales ta x on the cars since they were instructed that they didnt have to. Im one of the people that took delivery already and didnt pay sales tax. Its unclear if BMW is going to now ask me to go back to the dealer and pay the additional $3,900.00 Id owe for sales tax. Im not even sure they can do that. I have a signed contract that is paid in full and I wonder where the law stands on this. I dont even know if Id want to keep it if I have to pay the sales tax now. Dont get me wrong; I love the car, and I think the REx is a great option, but this will double the cost of the range extender. Instead of it costing me $3,850, it will cost me about $7,750! It really is a great option and so far I have loved how well it works, but its just not worth $7,750 in my opinion. I could buy a good used second car for less than that and use it for the long trips I need to take.

Then there are the people that have an i3 REx on order here in NJ and havent taken delivery yet, what will they do? At the last minute they find out the car is now costing them nearly $4,000 more! My good friend Chris Neffs car just arrived at the dealer yesterday and hes planning on picking it up as soon as possible. I wonder how hes going to react to it now costing him nearly $4,000 more! My client adviser Manny Antunes of JMK BMW has nine i3s with the REx options on order for customers. How many will cancel their order when they find this out? I bet at least half of them. What happens to the people like me that have signed contracts, and paid for the car already? I wonder where the law stands on this? Can we now be forced to pay more than our contracts stipulate? Personally Im not sure what Ill do if Im told I have to pay the $3,900 now. Will BMW NA eat the extra cost for the few people that already took delivery of their REx in NJ? Will they push it on the dealers? Perhaps this was a sign that I was really meant to get the BEV i3 after all. Ive already tinted the windows and now my car is being wrapped a new color at Designer Wraps down in Millville, NJ. Will JMK BMW end up with a custom-colored, Electronaut Edition i3 REx to sell as I wait another few months for a new i3 BEV to be made and delivered? This is going to be very interesting, stay tuned!

On July 22nd, tucked nicely at the end of a press release for the i3, were the words,“It will arrive in US showrooms in the second quarter of 2014.”

That means US i3 customers will have to wait a bit longer than expected. Although BMW has never made an official announcement on when US sales would begin, about four months ago BMWs North American president Ludwig Willisch told the Automotive News that the first batch of i3s arriving in the US would have the range extender option and would arrive in the US late this year, but that significant numbers of them wouldnt be delivered until early 2014.

So somehow late 2013 to early 2014 has been moved to 2nd quarter of 2014. It s only a delay of a few months but it has people wondering what was the cause of the delay. To add to the mystery is the fact that the European launch seems to remain on schedule and is still set for November of this year.

There are a couple possible reasons that I can imagine:

1) BMW is having some last minute manufacturing issues so they will need longer than expected to ramp up to the volume theyll need for the US launch. Everything about the production process for the i3 is different than a conventional car so it wouldnt be surprising to find that they are discovering some manufacturing snafus that will need a little extra time to iron out. This happens with conventional cars so one would imagine BMW will certainly experience issues refining the assembly line for the i3.

2) The range extender isnt ready. BMW expects that as much as 80% of the US i3 orders will have the range extender option. What if its not rea dy yet, and will take a few months longer? Its conceivable that they begin sales in Europe without the range extender option available and add it a few months later, right before the car launches in the US. A long shot, but possible. If the range extender is available for order at the European launch then this theory is proven wrong.

3) BMW has experienced a higher than expected interest in reservations in Europe, and wont be able to have an adequate supply for the European launch and still begin US deliveries only two months later. Perhaps they will need a couple of months to get the Leipzig plant up to full capacity and satisfy the initial European demand.

4) There really is no delay. Since BMW really never announced an official release date and the only reference ever made was from the Automotive News story where they interviewed Willisch. If you read the article (link above) you see the part where they talk about when the cars will sta rt arriving in the US they arent quoting Willisch, so it is possible they just used bad information and Willisch actually didnt tell them the car would launch then. Perhaps Willisch was referring to when i3s with range extenders would arrive in the US to be used for training and marketing purposes and the plan all along was to start selling them a couple of months later.

If I had to put money on it, Id probably go with dealing with manufacturing issues combined with heavier than planned demand in Europe. Perhaps well get some clarity on this at the i3 formal introduction on Monday.

Ill have the press conference streaming live here on this site, so tune in at 8:00am this Monday, July 29th.