09 S80 Upgrade headlights from halogen to LED
 

I recently upgraded the low beams from halogen to LED. The halogen bulbs seemed to only last 1-2 years. I bought cheap ones on eBay ($25/pair) which might be part of the problem. Wanted to give it a try instead of buying more halogens. They work well, very bright. However, I get a 'headlight out' message on the dashboard. I'm assuming the draw is so low it thinks the bulb is out.

My question for any experts here: If I spend more money on a better set of LED bulbs, would that possibly fix the issue, or is this because the car was not designed to have LED headlamps?

Yes, cheap bulbs are the cause. I have looked at several (Carid) that claim to prevent this.
bigger problem is that the reflectors are not designed for the LED bulbs. many reports of angry drivers in oncoming vehicles. Again, I have seen them CLAIM that the bulbs themselves are adjustable to mitigate this issue. I can't help but feel that there are reviews or forum posts on these bulbs but my (admittedly cursory) search hasn't found a good solution. plenty of bad reports though. lot of info on BMW forums as I recall.

I usually by the expensive halogens and damned if I get 1-2 years out of them at $25+ each (8-14 months ) so I would like to see you find a good, trouble free set.

Until recently I have been working evening shifts so was doing a significant amount of night driving.
Having had Philips halogen bulbs blow out on several occasions i took a gamble and fitted cheap chinese bulbs from ebay.
Approx' 4 years on they are still in the car and okay.
Just lucky I guess.

I'm sorry if i didn't make myself clear.
Even cheap Chinese bulbs will last a very long time. This is a function of an LED bulb.
The current drain is different and triggers the "Bulb Out" message. this is a function of a cheap Chinese Bulb without the correct resisters inline.
The light source within the bulb is very different leading to poor quality/blinding light patterns. A function of mismatched bulb and reflectors.

Have someone drive towards you some night while you are driving an oncoming vehicle. If the light is not in your eyes then all is good. However, since H7 bulbs have a directional socket they cannot simply be rotated around the reflector if there is a problem.

I know they will last 4 years and more, so in that regard you are not lucky. You are perhaps lucky that you haven't added a Miata as a grill ornament.

Led headlights
 

I’m actually very surprised they haven’t done aftermarket headlights for the s80 like the new Volvo with the line. That would be a huge upgrade if they had that :(