We can all agree the BMW’s i3 is a great car. It’s ultra cheap to run, has a classy, innovative cabin, and best of all is fun to drive. Same goes for the BMW i8 with its ability to blend Porsche performance with tiny, city car running costs.

Thing is, what happens if you have a family or actually need to carry people over long distances? Both are far from ideal.

If only BMW could combine the excellent efficiency of the i3 with the performance of an i8 and wrap it up in a more family-friendly package. Well, now it has, by creating the X5 xDrive40e.

In reality, BMW’s first non-‘i’ plug-in hybrid is both impressive and frustrating in equal measure. Impressive because its powerful 313hp hybrid powertrain means it really is fast. The X5 takes just 6.8 seconds to compete the 0-62mph dash and, thanks to its hybrid running gear, it averages a theoretical 86mpg. Like the i8, there’s also a useful pure-electric range of almost 20 miles  and at up to 75mph.

Now the annoying bit. The X5 emits 77g/km of CO2 – that might sound pretty impressive for a 2.3t SUV, but it’s pretty terrible compared with the 49g/km its rival the Volvo XC90 manages.

The impact of those emissions reflects the costs. The X5 will not be classed as an ultra-low emission vehicle under the new Office for Low Emission Vehicles scheme since it emits more than 75g/km of CO2. This means you’ll miss out on a Government grant. If you drive it in London, you’ll also be liable for the full daily £11.50 congestion charge.

It’s more taxing too. Instead of the 5% you pay for an XC90 plug-in hybrid, X5 drivers are hit with a bigger 13% benefit-in-kind bill.

Luckily, behind the wheel, the X5 is whisper quiet and also quick and effortless, and the transition from electric to petrol power is barely perceptible.

We found the ride unsettled on the 19-inch wheels, even with its adaptive suspension in ‘comfort’, and there’s fractionally more roll in the corners beside the regular car, but it’s still a good drive.

We also managed 37mpg overall with mixed driving, which isn’t bad, but buy a diesel if your SUV spends its life on the motorway or need seven seats – the plug-in hybrid batteries live underneath the boot floor, although boot space itself remains unchanged over the regular X5.

Costs wise, the BMW X5 can’t compete with the Mitsubishi Outlander PHEV, but if we’re honest, that car can’t really compete on performance with the German. So, for now the cost winner and our choice is the Volvo XC90.

It does everything the BMW does, has seven seats and an even more luxurious interior. Despite BMW’s fine plug-in hybrid pedigree, the Swede’s the better car.