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BMW Messes Up With the i3 REx Again, Not Sales Tax Free in New Jersey

Contrary to widespread belief the BMW i3 REx is not exempt from sales tax in New Jersey like it’s battery-only sibling. BMW have gone back on previous statements and franchise dealer instructions and confirmed that the i3 REx will need to pay New Jersey’s 7 per cent sales tax.

Electric and plug-in cars are subject to many different incentives from car pool lane access, to Government grants to — in some locations like New Jersey in the US and Norway in Europe — being exempt from sales tax. The BMW i3 REx is the range-extended version of BMW’s first mass produced electric car. It contains a small petrol engine that switches on when the battery gets low to keep the car driving along.

This is the second time BMW have messed up when it comes to the i3 REx and what incentives will apply to it. At the beginning of this year it was finally confirmed that the i3 REx would not be eligible for the Californian HOV-lane access White Sticker even though BMW were confident it would be.

Now, for the past months it has been claimed that the i3 REx is sales tax free, like the non-range-extended all-electric version. This has been so widely believed that dealers have even sold their first i3 REx cars without collecting sales tax. However it looks like this assumption was incorrect.

To the shock of many, the i3 REx is not sales tax exempt in New Jersey.

To the shock of many, the i3 REx is not sales tax exempt in New Jersey.

Speaking to GreenCarReports, Dave Buchko, of BMW’s product and technology communications group, said: “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.”

In New Jersey sales tax on new cars is set at 7 per cent, meaning that customers who have bought the top model i3 REx for $56,025 need to pay an additional $3921.75.

In effect, this makes the REx in New Jersey cost even more. Elsewhere in the US it will cost a buyer an additional $3850 whereas in New Jersey including this option suddenly makes the whole cost of the car jump by 7%. In effect, the REx on a fully loaded i3 in New Jersey costs the consumer $7771.75.

Now the situation of sales tax has been confirmed, anyone buying the car from now on will pay the correct, and more expensive, price. But at the time of publishing we don’t know how BMW will handle the situation of the customers who already believe they have paid for their car.

Speaking to contacts who live in New Jersey it could be possible for this money owing to be paid off through the customer’s end of tax year accounting. If the car was bought outright, the Federal Grant for the car will more than cover this cost allowing the tax to be paid without the customer ‘spending’ any money. However many people who buy electric cars are expecting the federal grant to reduce other parts of their tax bill.

This also wouldn’t apply to customers who have bought their car with BMW’s leasing program called Owners Choice with Flex where the federal grant has already been ‘used’.

If you know your way around the ins and outs of sales tax in New Jersey and understand the legal implications of this, please do get in contact. We would love to know. Our experience of the UK tax system means that if this had happened in the UK the buyer would be forced to pay up – tax in the UK being the responsibility of the consumer even though it is all handled automatically. But we don’t know of the legalities in the US.

We have contacted BMW for an official statement on this and will update the story as we know more.

Do you live in New Jersey? Does this change your view on getting an i3 REx? Let us know.


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  • Dennis Pascual

    What was the point to creating the BEVx category again? Pretty much just the additional $1,000 in the California State rebate. $2,500 for BEV and $1,500 for PHEV. Another BMW misstep. And I thought they handled the initial ActiveE launch poorly. They’re really going above and beyond on this one.

    • Michael Thwaite

      I’d love to see what was really goes on behind closed doors, what led up to these mis-haps. I’m going to guess that, in the main, these people aren’t stupid but someone, somewhere got something wrong, miscommunicated or let a rumor blossom into truth. I’ve seen Chinese whispers turn a good but incorrect idea into corporate truth.

      • CDspeed

        This is why I don’t trust what Tom M is saying about the REx will indicate that people want more electric range. I think it’s a choice between pure electric and gas, they told NJ customers that they’d get a zero emission incentive for a car with a tailpipe, that was incorrect. They’ve also been selling a J-1772 Mennekes charging cable and calling it a “rapid charging cable”. It’s odd how they’re producing an electric car, but are spreading a little misinformation due to a slight lack of knowledge on electric cars. I still think we need to buy more electric only i3s to send a message that we don’t want electric cars with generators, we want batteries only.

  • CDspeed

    This isn’t a mess up, on the grand scale of things one states incentives are not important. And its just the REx version. If you want the privileges of buying a zero emissions car, you have to buy a zero emissions car. I’m happy that California and New Jersey stuck to the rules, and didn’t give a car with a tailpipe incentives that are meant for zero emission cars. If they had let it slide then they’d have to let all cars with a generator pass for zero emissions, and then the incentive wouldn’t be doing it’s job.

    • Michael Thwaite

      I have to give you +1 with a heavy heart. You’re absolutely right of course, the tax incentive was born to promote zero emissions and to push us to that technology. I say heavy hearted though because, I know real people that made real decisions with real money that will be affected – one may be forced to cancel their order. To compound the problem, all the owners that I know well that chose REx did so to increase their real-world usage of the pure EV mode, to take the EV over the gasser, to try journeys on the edge of the EV range. The real shame is that they would have spent the money (as would I) on a larger battery instead.

      • CDspeed

        An incentive to me is an added bonus, and should not have an effect of the purchase decision for that very reason. Because it is just a bonus, you shouldn’t rely on it to help squeeze into a purchase that may be over your head. People need to make sure they can fully afford what they’re buying, just incase their coupon has expired.

  • kw

    Transport Evolved : Have you got a source for your claim that BMW were confident that the REx would be eligible for a white sticker? Thanks.

  • Espen Hugaas Andersen

    Sales tax is the responsibility of the consumer in the UK? How on earth does that work? Can the tax authorities come to the consumer a year later and say “You haven’t paid the sales tax on this can of soda you bought a year ago – pay up!”?nnnIn Norway at least, sales tax is the responsibility of the business. If BMW made a similar mistake here, they would have to cover the cost themselves, and they would have no recourse in trying to get the buyer to cover it, as the buyer would have a valid written contract specifying the purchase price. They *might* be able to get the deal cancelled – but then they would sit there with a significantly less valuable used car, (and a pissed off customer) so that wouldn’t be entirely clever.

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