Model S vs BMW 5 Series

[dennis]

Sure, all of those vehicles cost you $90k-$115k out the door. But is that a fair comparison? Setting aside the Karma (because it is something of a special case) the 5 year cost for fuel, maintenance and repairs for a BMW M5 are ~$36,000. Both the 2012 BMW 750i and 2012 Lexus LS600hLwill have a 5 year cost of ~$28,000. The majority of those costs are for gasoline, while the energy costs for your MSSP will be ~$2,000 for equivalent use (maintenance is harder to calculate because the vast majority of that cost will be from frequent tire replacement).

I'm prepared to stipulate that the interior of all of those vehicles is better than what you get with your MSSP. Are they $18,000-$25,000 better (or more, depending on the actual difference between maintenance costs)? $18-$25k is likely at the extreme low end of the premium you are paying for those vehicles, especially in the case of the M5. And that is completely aside from depreciation expenses.

While being firmly open to debate, I feel a strong argument can be made that your MSSP will depreciate much more gracefully than any BMW. The Lexus is extremely reliable in comparison to the BMW so I'll give it a partial pass, but even that is mitigated by a substantial yearly operational cost which works to cannibalize its value.

It would be interesting to know how many consumers base their purchase decision on 5 year cost of ownership vs. what they can afford to spend now (0.9% financing, $0 down, etc.).

I'll admit that as an avowed car nut since I was about age 7, my purchase decisions have been much more based on the emotional feeling the car generates, coupled with what I could currently afford, rather than an antiseptic analysis of 5 year cost of ownership, likely depreciation, et al. This is also true of the decision to buy the Model S (and the Karma, which has turned out to be 1/2 the cost per mile of the M5, even with $.20/kwh gouging from PG&E).

I'll also stipulate that I have gotten tons of enjoyment out of driving each of those cars, and would not have chosen a lower cost of ownership car unless it had the same emotional grab.

 

[Norbert]

I'll also stipulate that I have gotten tons of enjoyment out of driving each of those cars, and would not have chosen a lower cost of ownership car unless it had the same emotional grab.

TCO calculations may help when what you call the "emotional grab" is in fact there, but also a worry that it might be too expensive from a rational point of view, as that might not be actually the case.

 

[brianman]

And on cupholder placement/design, the Germans have placed last consistently (even in very recent models, mainly because their home market doesn't care about cupholders), so the Model S isn't exactly bucking any trend there.

I do find it somewhat amusing that the comparisons are very cherry-picked. Please want CoG lower than a Ferrari, cupholders matching the best (Lexus?), pricetag competing with a Civic, etc.

Nobody says "Telsa should match German cupholders".

I think the "Best car" talk is what brought some of this on, but it's amusing nonetheless.

 

[CapitalistOppressor]

It would be interesting to know how many consumers base their purchase decision on 5 year cost of ownership vs. what they can afford to spend now (0.9% financing, $0 down, etc.).

I'll admit that as an avowed car nut since I was about age 7, my purchase decisions have been much more based on the emotional feeling the car generates, coupled with what I could currently afford, rather than an antiseptic analysis of 5 year cost of ownership, likely depreciation, et al. This is also true of the decision to buy the Model S (and the Karma, which has turned out to be 1/2 the cost per mile of the M5, even with $.20/kwh gouging from PG&E).

I'll also stipulate that I have gotten tons of enjoyment out of driving each of those cars, and would not have chosen a lower cost of ownership car unless it had the same emotional grab.

I actually think folks rarely if ever look at the true cost of ownership of a car. In many ways, thats the point of this thread. Tesla has a huge advantage here and they need to find a way to educate the buying public.

As a practical matter, TCO is the most accurate way to make a purchase decision, and people have used a bastardized version by looking at MPG numbers and consumer reliability reports. That works well enough when every car is an ICE vehicle and people have life experiences to make an informed choice. But folks don't have experience with electric vehicles which means someone needs to sit them down and actually educate them about what is involved in a formal TCO calculation, then point out the actual numbers for Model S vs the competition.

Keep in mind that there is a widespread view that electric cars are "more expensive" than gas powered cars. That prejudice is widespread even among folks in these forums who are Tesla supporters and who support EV's for a variety of reasons. There is a constant undercurrent on here that some aspects of the Model S might be inferior compared to some competitors. All fine and good, and possibly true.

But how valid are those concerns if the Model S is in fact significantly less expensive than those competitors? Shouldn't you expect to get what you pay for? In terms of actual money coming out of your pocket the 2012 Lexus LS600hL likely costs 50% more than your Model S Signature Performance does based on realistic depreciation expectations for your Sig. A 2013 BMW M5 is likely in similar territory if it has similar TCO numbers to the earlier versions. Personally, if one car costs 50% more than another car, thats information I take into account when comparing features between those two cars.

 

[dennis]

But how valid are those concerns if the Model S is in fact significantly less expensive than those competitors? Shouldn't you expect to get what you pay for? In terms of actual money coming out of your pocket the 2012 Lexus LS600hL likely costs 50% more than your Model S Signature Performance does based on realistic depreciation expectations for your Sig. A 2013 BMW M5 is likely in similar territory if it has similar TCO numbers to the earlier versions. Personally, if one car costs 50% more than another car, thats information I take into account when comparing features between those two cars.

Agreed, so long as the lower cost of ownership car meets the minimum required feature set. Scenario:

Spouse 1: Honey, this Model S doesn't have a vanity mirror light or parking sensors.

Spouse 2: But honey, the Model S is going to cost us 1/2 as much to operate over the next 5 years as the BMW and Lexus cars we looked at this morning.

Spouse 1: I don't care, it doesn't have a vanity mirror light and parking sensors. We're NOT going to buy it.

 

[smorgasbord]

Spouse 1: I don't care, it doesn't have a vanity mirror light and parking sensors. We're NOT going to buy it.

If you're really talking 1/2 the TCO, adding a vanity mirror light and adding parking sensors in the aftermarket seems a financial no-brainer.

I wish it were that easy: for what I'd want to do, I think I'm looking at $20K, probably more, in the aftermarket:

1) Rework door insides to provide pockets.
2) Design and build new center console (not the full dash to back of seat thing others here like, btw). Have cup holders on the back of the console for the rear seat passengers.
3) Replace front seats with BMW Comfort seats.
4) Rework rear bench seat to have fold-down armrest in the middle.
5) Replace headliner with darker material
6) Reduce sunroof crossing bar cover to its minimum dimension and cover it with headliner material.
7) Replace most of the brushed aluminum trim and and door handles.
8) Add park distance sensors.
9) Add light duty tow hitch (for bicycle rack).
10) Add heat to the steering wheel, if possible.
11) Add motors for side mirrors, if possible.
12) Add an LED light to passenger side vanity mirror.

And then there are some style things, like redoing the front nose in CF, replacing as much of the chrome as possible with CF, or something to make it look like the car was styled in the 21st century, not in 1990's chrome.

 

[CapitalistOppressor]

If you're really talking 1/2 the TCO, adding a vanity mirror light and adding parking sensors in the aftermarket seems a financial no-brainer.

I wish it were that easy: for what I'd want to do, I think I'm looking at $20K, probably more, in the aftermarket:

1) Rework door insides to provide pockets.
2) Design and build new center console (not the full dash to back of seat thing others here like, btw). Have cup holders on the back of the console for the rear seat passengers.
3) Replace front seats with BMW Comfort seats.
4) Rework rear bench seat to have fold-down armrest in the middle.
5) Replace headliner with darker material
6) Reduce sunroof crossing bar cover to its minimum dimension and cover it with headliner material.
7) Replace most of the brushed aluminum trim and and door handles.
8) Add park distance sensors.
9) Add light duty tow hitch (for bicycle rack).
10) Add heat to the steering wheel, if possible.
11) Add motors for side mirrors, if possible.
12) Add an LED light to passenger side vanity mirror.

And then there are some style things, like redoing the front nose in CF, replacing as much of the chrome as possible with CF, or something to make it look like the car was styled in the 21st century, not in 1990's chrome.

Ya, I don't think all of that will get done anytime soon. Best to move on.

 

[VolkerP]

If you're really talking 1/2 the TCO, adding a vanity mirror light and adding parking sensors in the aftermarket seems a financial no-brainer.

I wish it were that easy: for what I'd want to do, I think I'm looking at $20K, probably more, in the aftermarket:

1) Rework door insides to provide pockets.
...

+1. Sign me in. Can we get a quote for a group by at Al & Ed? :biggrin:

 

[Johann Koeber]

I'll buy that too.

 

[jerry33]

It would be interesting to know how many consumers base their purchase decision on 5 year cost of ownership vs. what they can afford to spend now (0.9% financing, $0 down, etc.).

I'd suggest none because consumers have been used to purchasing ICE cars, and traditional ICE cars of a given price range have about the same operating costs so there was no need to do any detailed TCO calculations (the few that had much higher operating costs than average stopped selling quickly--think Edsel).

With the introduction of hybrids and BEVs, the five and ten year TCO cost comparisons become important but the average consumer will require a long education process before they get it.

 

[Robert.Boston]

I drive a BMW 535 X-drive Sportswagon (2010). Some observations:

• Front seats very similar. Adjustable headrests in BMW look bulky/sloppy. Base Dakota leather in BMW is "coarse" and stiff; Tesla's nappa has a softer hand (but how will it wear?). Tesla's lack of grab-handles makes the Model S challenging for older passengers.
• Front storage: BMW center console storage is nearly useless, heavily subdivided; but door storage is useful. Tesla's under-screen shelf + "kangaroo pouch" on seats will be fine for most needs. Open space will be appreciated by both me (briefcase) and my wife (purse).
• Rear seat: BMW seats are better for 2 passengers, but worse for middle passenger. BMW provides rear passengers 2 x 12v charging, cupholders and storage in flip-down console, door storage, and back-of-front-seat pockets -- which is more than we ever use, but some amount of storage is needed for longer drives. Headroom in BMW (wagon) is far better than Tesla. Tesla's lack of grab-handles makes the Model S challenging for older passengers.
• Rear cargo: 12v charger in BMW is useful. BMW power lift-gate has broken several times.
• Drive and suspension: Tesla wins hands-down in both categories (at least with Tesla's air suspension). The BMW engine is great, of course, but doesn't have the low-end torque for great driving at low speeds (rush hour). BMW suspension doesn't handle rough gravel roads well.
• Maintenance: our 535i has been an on-going source of extended visits with BMW service. This is a known issue with this engine. My wife has put BMW on the "no buy" list for future cars based on this experience (it's her car, so she deals with the service center).

Generally, the BMW 5 (and 7, and Audi A6 and A8) pay more attention to rear-seat passengers than Tesla does. Audi does this best, which is why the A8L is the dominant car in the European diplomatic community.

 

[unclfuzzy]

I would posit that there will continue to be a significant number of people buying a Model S for whom it will be 2x - 4x the price of any car they have ever owned, at least until there are other real options for PEVs out there. I don't have the luxury of comparing the Model S interior to a fleet of previously owned BMWs, Audis, Aston Matins, etc. Compared to the Korean and Japanese cars I've owned most recently it's lovely. Compared to any American car I've been in in the past 30 years it's spectacular. We may not all do a rational TCO evaluation, but the gut desire to go completely gas-free for economic, personal, and political reasons puts many of us over the line in favor of stretching to buy the Model S. And I guarantee there are enough people like me out there to meet the sales targets Tesla has set for the S until Bluestar is imminent.

Oh, and at least if it had milk crates for seats people might stop complaining about the lack of console storage. ;-)

 

[CapitalistOppressor]

I drive a BMW 535 X-drive Sportswagon (2010). Some observations:

• Front seats very similar. Adjustable headrests in BMW look bulky/sloppy. Base Dakota leather in BMW is "coarse" and stiff; Tesla's nappa has a softer hand (but how will it wear?). Tesla's lack of grab-handles makes the Model S challenging for older passengers.
• Front storage: BMW center console storage is nearly useless, heavily subdivided; but door storage is useful. Tesla's under-screen shelf + "kangaroo pouch" on seats will be fine for most needs. Open space will be appreciated by both me (briefcase) and my wife (purse).
• Rear seat: BMW seats are better for 2 passengers, but worse for middle passenger. BMW provides rear passengers 2 x 12v charging, cupholders and storage in flip-down console, door storage, and back-of-front-seat pockets -- which is more than we ever use, but some amount of storage is needed for longer drives. Headroom in BMW (wagon) is far better than Tesla. Tesla's lack of grab-handles makes the Model S challenging for older passengers.
• Rear cargo: 12v charger in BMW is useful. BMW power lift-gate has broken several times.
• Drive and suspension: Tesla wins hands-down in both categories (at least with Tesla's air suspension). The BMW engine is great, of course, but doesn't have the low-end torque for great driving at low speeds (rush hour). BMW suspension doesn't handle rough gravel roads well.
• Maintenance: our 535i has been an on-going source of extended visits with BMW service. This is a known issue with this engine. My wife has put BMW on the "no buy" list for future cars based on this experience (it's her car, so she deals with the service center).

Generally, the BMW 5 (and 7, and Audi A6 and A8) pay more attention to rear-seat passengers than Tesla does. Audi does this best, which is why the A8L is the dominant car in the European diplomatic community.

I think that is a fair description of the 535i sedan as well, only with less interior room. The center console is annoying and makes me feel boxed in with it being up so high. I really like the center space in the Model S because it's a natural spot for my laptop, which currently gets dumped behind the driver seat or in front of the front passenger seat.

As to storage in the door panels, I have never in my life used it for anything. I've used the behind the seat pouches on occasion, and the lack of a 12v plug in the Model S is an oversight. But overall, the uncluttered interior of the Model S appeals to me.

Interior knickynacks aside, my biggest problem with the 535i is that it's just kinda boring anymore. Sure, it's the class leader, has decent performance in comparison to its peers, etc. But it just seems so stale to me. Kinda like the 2 year old cracker fragment I recently found in my door pouch.

 

[chrisn]

Hi folks. I read most of this thread on the M5 specific one. I have an E60 M5 (among other guzzlers) and have struggled with whether to go for a Model S Perf or the new F10 M5. I really wanted to go for the Model S, by I ultimately decided to get one more ICE performance sedan, and ordered an M5. The issues discussed here were all on my mind.

In terms of TCO, I worried about three main issues:

1. Viability risk. For Roadster buyers, the Company's survival must feel like a "sure thing," but it really isn't. Even Elon speaks frequently about the multiple ways that they might fail. What will an X% of a Y% step-function decline in value do to your TCO if the company goes bust? (Hint: X%*Y%*Price).

2. Beta tester hassle/risk. We don't know what we don't know. Assembly line production models are not hand-built prototypes. We should expect numerous design and manufacturing defects to reveal themselves in the coming months/years. Most will be merely annoying, but some may be significant. How many trips to the dealer do you expect in the first three years? Seeing this, what will the next guy want to pay for the car (warranty or not)?

3. Obsolescence risk. The depreciation curve could accelerate if future technology / scale economies reduce reduce the relative value of the Model S.

I am not saying that any of these by itself is a decisive factor or that, collectively, they should sway early adopters (God bless them), but the OP's TOC calculations and analysis disregard these factors entirely. Even if you think the chance of serious issues is <30% and, therefore, you ignore the risk, doesn't mean that it doesn't "cost" you to bear the risk. It's like life insurance or fire insurance. You still get full value even if, in a given month, you don't die and your house doesn't burn down.

As an aside, my DD is a Chevy Volt that I charge off of solar panels, so don't think I am anti-EV or am ignoring consumables.

 

[NEWDL]

Chrisn,
You have to have some faith... Be a bit crazy... and want it bad! None of those enter into your mathematical equations...

 

[Doug_G]

3. Obsolescence risk. The depreciation curve could accelerate if future technology / scale economies reduce reduce the relative value of the Model S.

That risk also applies to the M5, since it's not electric...

 

[ckessel]

That risk also applies to the M5, since it's not electric...

Indeed, I'm not overly worried about the obsolesce risk hurting TCO. Normal depreciation is so bad today that it can't get much worse. The Model S batteries are built to be replaceable, so it may have a leg up in upgrading to avoid obsolescence.

 

[mnx]

Chris, I just can't imagine owning another ICE car with a lousy transmission getting in the way of driving... Have you driven the Model S Perf?

 

[Robert.Boston]

Another strategy, @chrisn, would be to keep your E60 M5 (which is, after all, a great car) and have the MSP. Diversify your portfolio and your fun.

 

[rcc]

Timing is everything. There's early adopters and bleeding edge adopters. The Model S is the "bet the company" product. And people buying the Model S in the first 9 months are bleeding edge. People buying now are taking a real risk although I think it's good one. People buying 9 months now should have a much clearer view into the crystal ball.

Viability: In 9 months, we should know if Telsa can ramp production. We'll also know a lot more about the Model S (extended reviews and quality) and should have some insight into whether the demand will sustain itself. Given all that, we should be able to guage whether Tesla will survive in the short-run (a year or two) and have some insight into their odds of surviving in the long run. It looks like Telsa can be profitable if the Model S does even reasonably well. So as long as they manage the financials so that future vehicles don't turn into "bet the company" investments, things should be ok for at least a few years.

Quality: In 9 months, we should know about most if not all the serious bugs that don't show up until you scale up production including stuff that triggers recalls.

Obsolescence: the question is will market forces and technology trends will drive the cost of a Model-S-like car down to the point where the S has near zero resale value? Think computers.

This is where it gets complicated because you've got market forces, technology trends and have to think mid-term (2-3 years) and long-term. Long-term is all about technology trends. Short/mid-term is all about competition (market forces).

From a competitive standpoint, I don't think anyone is going to bring a Model S-like car out in 2-3 years at competitive prices. They can't do it without battery management tech like Telsa has. And if they had that, we'd be hearing about it.

From a technology trends standpoint, the major thing that can change in EV-space is battery and battery management technology (charging, etc.).

What is very very unlikely to change significantly is the chassis design fundamentals, manufacturing with aluminum, electric motor technology, brakes, tires, wheels, etc. In other words, almost everything else about the car.

Elon says that battery density is improving at 7% a year. In 5 years, that means batteries will be 40% more energy-dense than they are today. So 5 years from now, I'm expecting that EVs will have 40% more range at today's cost. In 3 years, that number would be 23%.

That doesn't sound like a game-changer to me. It should cause Model S to lose some of its value faster than normal. On the other hand, the Model S could hold value better than normal because of the fewer # of moving parts that can wear out. Who knows? Take your best guess.

However, the 40KwH model will be most vulnerable to this over the next 3 years because a 23% increase in battery density could increase the range of non-Tesla EV's to be roughly comparable to the Model S. But I don't see anyone matching the range of the 85KwH model in <3 years. Except Tesla. And I expect Tesla will use the density improvements to drive cost down on the GenIII first before they increase range above the current Model S. But again, who knows? That all depends on how successful Tesla is at holding down costs everywhere else in the GenIII.

How well will the Model S hold value over 5 years? Beats me. The car itself will not be obsolete. The battery tech could be outdated enough to drive value down. On the other hand, if Tesla is still around and viable, a Model S owner (or used car buyer) could just wait until batteries get "cheap enough" and buy a new pack. That gives you an N year car with battery density and cost to the new cars at that time. With far fewer mechanical systems that are aging and have to be repaired/replaced. Not as good as new but lots better than buying say, an 8 year old conventional car.

The tech trend that could wipe out Tesla's current technology advantage is if future batteries don't need significant management. Or someone develops another compelling power source for cars. We're probably at least 5 years away from that assuming it ever happens at all. And if Tesla is still around when that happens, hopefully they'll have developed enough other advantages that they can stay in business.

Summary: if you're locking in now, yes, you're a bleeding edge adopter taking a significant risk. That's why you have the option of choosing "Signature Red" :biggrin:. If you can wait a while longer (or have no choice because you have a >9000 P#), you'll still be an early adopter but I think we'll have a pretty good view into what kind of car the Model S truly is and Tesla's viability over the next few years.

Disclaimer: in addition to being in line for a Model S, after I did the above analysis and thought hard about Elon's track record, I went long on Tesla.