False Reports That BMW Plans to Lease, But Not Sell, Its 2013 Megacity Electric Car

By · February 07, 2011

Megacity Platform

BMW is experimenting with the platform of its first production electric car, due in 2013. But should the company experiment with the ownership model?

Update:: There are conflicting stories about whether or not BMW will sell the Megacity. As indicated in our post, Automotive News says that the car will only be available to lease. Just-auto.com quotes executives who say that it will definitely be available for sale. Our contributor Tom Moloughney, an active participant in the Mini E test program, confirms that the Megacity will available for sale.

In 2013, when BMW releases its full production electric car known now as “Megacity,” it will reflect a six-year project to rethink all aspects of the automobile—including the core vehicle structure and materials, manufacturing processes, and obviously the drivetrain. But it one key area—marketing—the Megacity might be more of a throwback than a bold move into the future. According to Automotive News, BMW will lease the vehicle rather than sell it—an approach that harkens back to the painful chapter of electric cars when General Motors snatched the EV1 from its leaseholders.

BMW is expected to announce the exact model name for the Megacity on Feb. 21.

BMW sales chief Ian Robertson couched the marketing issue in philosophical terms. "We're looking for an alternative to traditional purchase or leasing of a vehicle," he said. ''We don't want to sell the car, but rather the use of the car." While car sharing is on the rise, and urban dwellers are looking for creative alternatives to vehicle ownership models, the move to only offer a lease could be interpreted as lack of confidence or as a cost structure out of control.

Honda FCX Clarity fuel cell vehicle has been leased for a number of years for $600 per month. In December, Daimler leased its Mercedes B-Class F-Cell hydrogen fuel car to California man for $845 per month. Last month, a Washington, DC woman became the first U.S. driver of the Smart ED (Electric Drive) when she began her lease of $599 per month.

Participants in BMW’s Mini E test program paid $850 a month for their cars in the first year of the program. The lease is $600 for those continuing into the second year. BMW soon will put its next test EV, the ActiveE, on lease. Ideally, the shift from these test platforms to a full production vehicle will also mean that consumers have the option to either lease or buy.

Automotive News cited a few reasons why BMW is opting for the lease strategy—now proving to be incorrect—for the Megacity:

  • The company can’t recoup the high development and production costs.
  • Falling battery costs will make it difficult to calculate the residual value of purchased cars
  • The final cost of the vehicle will be too expensive for buyers

On a separate note, BMW Financial Officer Frederick Eichiner told the German website Focus.de that the Megacity will eventually receive an optional gas-powered range extender, turning the electric car into a plug-in hybrid.

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.