diff --git a/homeassistant/components/bmw_connected_drive/coordinator.py b/homeassistant/components/bmw_connected_drive/coordinator.py
index 4a586aab373..2634c6069c9 100644
--- a/homeassistant/components/bmw_connected_drive/coordinator.py
+++ b/homeassistant/components/bmw_connected_drive/coordinator.py
@@ -58,7 +58,10 @@ class BMWDataUpdateCoordinator(DataUpdateCoordinator[None]):
         try:
             await self.account.get_vehicles()
         except MyBMWAuthError as err:
-            # Clear refresh token and trigger reauth
+            # Allow one retry interval before raising AuthFailed to avoid flaky API issues
+            if self.last_update_success:
+                raise UpdateFailed(err) from err
+            # Clear refresh token and trigger reauth if previous update failed as well
             self._update_config_entry_refresh_token(None)
             raise ConfigEntryAuthFailed(err) from err
         except (MyBMWAPIError, RequestError) as err:
diff --git a/tests/components/bmw_connected_drive/test_coordinator.py b/tests/components/bmw_connected_drive/test_coordinator.py
new file mode 100644
index 00000000000..ab2d08376dd
--- /dev/null
+++ b/tests/components/bmw_connected_drive/test_coordinator.py
@@ -0,0 +1,92 @@
+"""Test BMW coordinator."""
+from datetime import timedelta
+from unittest.mock import patch
+
+from bimmer_connected.models import MyBMWAPIError, MyBMWAuthError
+from freezegun.api import FrozenDateTimeFactory
+import respx
+
+from homeassistant.core import HomeAssistant
+from homeassistant.exceptions import ConfigEntryAuthFailed
+from homeassistant.helpers.update_coordinator import UpdateFailed
+
+from . import FIXTURE_CONFIG_ENTRY
+
+from tests.common import MockConfigEntry, async_fire_time_changed
+
+
+async def test_update_success(hass: HomeAssistant, bmw_fixture: respx.Router) -> None:
+    """Test the reauth form."""
+    config_entry = MockConfigEntry(**FIXTURE_CONFIG_ENTRY)
+    config_entry.add_to_hass(hass)
+
+    await hass.config_entries.async_setup(config_entry.entry_id)
+    await hass.async_block_till_done()
+
+    assert (
+        hass.data[config_entry.domain][config_entry.entry_id].last_update_success
+        is True
+    )
+
+
+async def test_update_failed(
+    hass: HomeAssistant, bmw_fixture: respx.Router, freezer: FrozenDateTimeFactory
+) -> None:
+    """Test the reauth form."""
+    config_entry = MockConfigEntry(**FIXTURE_CONFIG_ENTRY)
+    config_entry.add_to_hass(hass)
+
+    await hass.config_entries.async_setup(config_entry.entry_id)
+    await hass.async_block_till_done()
+
+    coordinator = hass.data[config_entry.domain][config_entry.entry_id]
+
+    assert coordinator.last_update_success is True
+
+    freezer.tick(timedelta(minutes=5, seconds=1))
+    async_fire_time_changed(hass)
+    with patch(
+        "bimmer_connected.account.MyBMWAccount.get_vehicles",
+        side_effect=MyBMWAPIError("Test error"),
+    ):
+        await hass.async_block_till_done()
+
+    assert coordinator.last_update_success is False
+    assert isinstance(coordinator.last_exception, UpdateFailed) is True
+
+
+async def test_update_reauth(
+    hass: HomeAssistant, bmw_fixture: respx.Router, freezer: FrozenDateTimeFactory
+) -> None:
+    """Test the reauth form."""
+    config_entry = MockConfigEntry(**FIXTURE_CONFIG_ENTRY)
+    config_entry.add_to_hass(hass)
+
+    await hass.config_entries.async_setup(config_entry.entry_id)
+    await hass.async_block_till_done()
+
+    coordinator = hass.data[config_entry.domain][config_entry.entry_id]
+
+    assert coordinator.last_update_success is True
+
+    freezer.tick(timedelta(minutes=5, seconds=1))
+    async_fire_time_changed(hass)
+    with patch(
+        "bimmer_connected.account.MyBMWAccount.get_vehicles",
+        side_effect=MyBMWAuthError("Test error"),
+    ):
+        await hass.async_block_till_done()
+
+    assert coordinator.last_update_success is False
+    assert isinstance(coordinator.last_exception, UpdateFailed) is True
+
+    freezer.tick(timedelta(minutes=5, seconds=1))
+    async_fire_time_changed(hass)
+    with patch(
+        "bimmer_connected.account.MyBMWAccount.get_vehicles",
+        side_effect=MyBMWAuthError("Test error"),
+    ):
+        await hass.async_block_till_done()
+
+    assert coordinator.last_update_success is False
+    assert isinstance(coordinator.last_exception, ConfigEntryAuthFailed) is True