Shaping The Future - Fascination, Innovation, Technology and Motorsport.

Shaping The Future - Fascination, Innovation, Technology and Motorsport.

Contents:
1. Preface by Dr. Norbert Reithofer, Board Member BMW AG: Individual Mobility,
Dynamic Cars, Responsible Use of Resources - an Inevitable Contradiction in
Terms?

2. Shaping the Future. Fascination - Innovation - Technology - Motorsport.
(Summary)

3. Magnesium - A Material with Great Perspectives. BMW Group Developing the
World's First Composite Magnesium/Aluminum crankcase.

4. CFP - Another Material with Great Perspectives.

5. Formula One Technology Cast in One Mold.

6. Lightweight Technology: Achieving the Right Ecological Balance.

7. Bringing Together Reality and the Virtual World: Augmented Reality Setting
New Horizons.

8. Keeping Your Distance the Comfortable Way: ACC Active Cruise Control.

9. ACC Stop & Go: Active Cruise Control for the Low Speed Range.

10. Talking Cars: Intelligent Cars Exchanging Information by Themselves.

11. Efficient Dynamics: Up to 1,000 Nm Torque on 15% Less Fuel.

12. Miniature Head-Up Display: Innovations in Formula One and Sailing

13. BMW Motorsport: A Whole Series of Victories - to the Benefit of Series
Production.
14. A Heritage of Innovation.

1. Individual Mobility, Dynamic Cars, Responsible Use of Resources -
an Inevitable Contradiction in Terms?

The automotive industry is facing a huge global challenge: to reduce fuel
consumption and minimize Carbon Dioxide emissions accordingly. And lightweight
technology plays a key role in his context. The BMW Group is developing new
technologies, materials and processes in order to further improve the
efficiency and ecological balance of its cars, whilst naturally maintaining the
highest standard of customer benefits. Following this underlying objective in
our development activities, we are able in the process to acquire valuable
development, production and process-related know-how. Strategic partnerships
are of great significance in this context, allowing us to use the most advanced
and latest technologies. And since there is no such thing as the "ideal"
all-round lightweight material, the BMW Group, focusing on process
dependability, product quality and economy, is looking for intelligent
combinations of metals and synthetic materials.

A good example of this development is the new BMW 5 Series Saloon with its
low-weight aluminum front section, another equally good example is the roof of
the BMW M3 CSL made of carbon-fiber-reinforced plastic. The result in each case
is greater fuel economy and enhanced driving dynamics. And taking an entirely
new approach also in engine construction, we are introducing the world's first
composite magnesium/aluminum crankcase.

Preserving the individual's personal mobility is just as important for a car
maker, especially with traffic volume growing the world over. Seeking to offer
our customers BMW's proverbial sheer driving pleasure also in future, we
realize that we must capitalize on the existing transport routes and network.
Accordingly, we are working on cars incorporating a multitude of different
sensors in order to detect current driving conditions and exchange this
information independently and directly with other vehicles. Detecting traffic
congestion or local hazards efficiently and in good time in this process, these
systems provide extra comfort, greater efficiency, and enhanced safety on the
road.

We also derive valuable synergies for developing new technologies from our
broad-scale involvement in motorsport, with the additional advantage of a
positive, dynamic image not only for the Company and our sporting success but
also for our customers. And last but not least, we are able to look back at a
long tradition of achievements full of success: BMW has always stood for
progress in technology and leadership in innovation. So that now, resting on
this stable foundation, we are able to look into the future full of confidence
and optimism: Through its innovative power, the BMW Group is perfectly
prepared to master the challenges of a successful future also in the long term.

-Dr. Norbert Reithofer, Board Member BMW AG.

2. Shaping the Future. Fascination - Innovation - Technology - Motorsport.
(Summary)

Intelligent lightweight technology is the future.
There is no single, all-round solution for lightweight technology efficient in
structural, design and economic terms and sensible at the same time in
ecological terms. With this in mind BMW Group experts examine and develop the
right concepts and combinations of materials with a clear focus on each vehicle
project. In this process BMW Group specialists are looking in particular at
potentials for saving weight and, accordingly, energy, in conjunction with
advantages in design, structural and functional efficiency. Precisely this
gives the customer direct benefits and advantages, since the driving dynamics
and agility of a car result directly from the right choice of materials. And it
is also here that a stable ecological balance leads to a universal, all-round
focus on materials and, as a result, meaningful material concepts.

BMW Group clearly defining the use of lightweight magnesium. Thirty-three
percent lighter than aluminum and 77 percent lighter than steel, magnesium
offers significant potentials in automotive construction. BMW Group specialists
have therefore developed this material to an even higher standard, redefining
the former limits to the use of aluminum in the automobile. And introducing the
composite crankcase based on a combination of magnesium and aluminum, the BMW
Group is setting a new milestone in materials and engine technology, the
substitution of aluminum by magnesium reducing the weight of the crankcase by
approximately 10 kilos. This development already close to series production
level will be entering regular production in the next two years.

Intelligent lightweight technology featuring carbon-fiber-reinforced plastics
(CFP).
The BMW Group is promoting development and process technologies for the series
use of body structures and components made of carbon-fiber-reinforced plastics
(CFP). An outstanding example of the use of this innovative composite
lightweight material in series production is the CFP roof of the BMW M3 CSL
proudly displaying this material at very first sight. This CFP roof built in
the world's first highly automated production process for CFP body components
at BMW's Landshut Plant offers significant advantages through lower weight
combined with outstanding resistance to both crash forces
and corrosion.

So far components made of carbon-fiber and composite carbon materials have
served mainly as individual, one-off parts used in aerospace and motor racing
applications. But wherever there is a need for light, extra-stiff and very
strong materials able to take up substantial loads, designers and construction
engineers are using the advantages of carbon-fiber and composite carbon
constructions to an ever-increasing extent.

Between reality and the virtual world: Augmented Reality setting new horizons.
Focusing consistently on Augmented Reality, BMW is focusing on a technology,
which allows the user wearing data glasses to superimpose virtual,
three-dimensional and animated pictures on to a real background. An area where
this concept might be used efficiently is service, where the mechanic wearing
data glasses is able to superimpose virtual information from the repair manual
on to the "real" background to obtain all information in real time on complex
processes and keep his hands free for working with maximum efficiency.

ACC Stop & Go Active Cruise Control.
ACC Active Cruise Control complete with a radar distance sensor already helps
the driver of the BMW 5 and 7 Series maintain the right distance from a vehicle
ahead and keep the appropriate speed on the road. And now BMW test cars even
feature an ACC Stop & Go function covering the full range of ACC speed control
all the way to a standstill.

To provide this function, vehicles equipped with ACC use radar sensors to cover
the entire area in front of the car, both further away and close-up. These
sensors determine the distance, the position and speed of vehicles ahead of the
driver's car, ACC Stop & Go then using this information to intervene in the
drive system and apply the brakes in order to keep the right distance from the
vehicle ahead, if necessary, by slowing down the car until it comes to a
complete standstill.

Following BMW's underlying philosophy, the driver always remains in control and
is able to intervene whenever necessary. A further point is that automatic
intervention in the brakes is limited, with ACC Stop & Go requesting the driver
in good time to take over whenever necessary.

Car/car communication: a direct dialogue without any infrastructure.
Using ad-hoc communication networks, cars are able to "talk" directly with one
another, compiling data from their surroundings, processing the information
received and exchanging this input with other cars - quite independently and
without requiring any kind of firm infrastructure. This ensures full coverage
of traffic information as well as possibly hazardous situations monitored
consistently at all times. The big advantage is the optimisation of traffic
flow also on side routes as well as the provision of local hazard warnings
reaching the road user quickly and reliably.

This car/car communication is based on wireless LAN transmission technology
providing
the foundation for full coverage ad-hoc networks where the car acts not only as
a sender and receiver, but also as an intermediary in transferring information.

Efficient dynamics: overcoming an apparent contradiction in terms.
BMW Group engineers have found the right way to overcome a seemingly insoluble
contradiction in terms, thus making the inefficient use of energy in specific
situations a thing of the past.

The objective in this development process is to achieve maximum efficiency in
dynamics. And this is made reality in the first BMW X5 research vehicle built
for this purpose, integrating an electric motor between the engine and the
transmission. Boosting the conventional drivetrain when accelerating, this
electric motor is able to increase start-up torque to a peak of up to 1,000 Nm,
the electric motor and combustion engine thus interacting to achieve
unprecedented smoothness and response combined with extra power and performance
particularly at low engine speeds. The electrical energy used in this process
is derived from kinetic energy stored in capacitors whenever the car is driving
in overrun or when the driver applies the brakes. This new technical concept
saves the driver up to 15 percent fuel by storing brake energy and supporting
and/or reducing loads on the combustion engine under inefficient driving
conditions.

Miniature head-up display.
A new technology from BMW's Technology Office in Palo Alto in Silicon Valley
revolutionizes communication processes in sailing: a miniature head-up display
in the sunglasses of the sailors in the ORACLE BMW Racing Team serves to
visually present information directly in the sailor's line of vision.

The big advantage is that the viewer always receives important information
right where he needs it, saving valuable time in taking the necessary action
and benefiting from an enhanced level of safety. Similar technology is used in
Ralf Schumacher's prototype Formula One helmet, and at least in technical terms
there are no reasons why this technology should now not be used in everyday
motoring. Transfer of technology from motorsport to series production providing
greater synergies.

Motorsport sets the benchmark for fast work and precise efficiency. Indeed,
this applies particularly to the many engineers and other specialists working
on motorsport applications far away from the race track, focusing untiringly on
even the smallest technical potential allowing the racing driver to compete
with the very best worldwide. Knowledge gained in this process is then used by
engineers in series development, ultimately to the benefit of the customer. And
in exactly the opposite process, professionals in motorsport are able to
capitalize on the wide range of practical knowledge and experience gained in
series production.

BMW motorsport: winning races to the benefit of series production.
To ensure success in all disciplines of BMW motorsport in 2003 - Formula One,
the European Touring Car Championship, the 24 Hours of Nürburgring, and the
promotion of talents in Formula BMW - BMW engineers in series production and
motorsport cooperate closely as one team. Indeed, BMW motorsport serves as a
kind of high-tech lab in research and development, construction, rapid
prototyping, electronics, production, and in other areas. Pressure for
performance straight from the race track serves to speed up and optimize
developments in Munich, and the know-how of BMW's series production engineers
forms a strong and stable foundation.

The BMW Group: a great heritage of innovation.
The BMW Group has always seen innovation as a guarantee for success on the road
and in business. In many areas, particularly in engine technology and
electronics, BMW was and still is the pacemaker for new technologies.

And the list of achievements is truly impressive, ranging from the first
electronic speedometer with a fuel consumption indicator and Check/Control
through the world's first electrohydraulic anti-lock brake system (ABS) all the
way to the introduction of xenon headlights and the ITS head airbag in the 7
Series. A particularly outstanding example of such developments in engine
technology, in turn, is the BMW Group's fully variable VALVETRONIC valve
control.

Proceeding from this experience, the BMW Group will continue to actively shape
the future, already paving the way for environmentally compatible mobility back
in 1994 with the world's first series production of dual-mode natural gas cars.
Then, on the occasion of the Expo 2000 World Fair, the BMW Group presented the
first fleet of 15 BMW 750hL research cars featuring a hydrogen-powered
combustion engine. In the meantime BMW is already working all-out on the first
series production car in the world with hydrogen drive.

3. Magnesium - A Material with Great Perspectives.

* BMW Group developing new, trendsetting options for the use
of magnesium.
* World's first composite magnesium/aluminum crankcase for a water-cooled
engine; magnesium alloy with new features and properties.
* Landshut Plant acting as the Competence Center for Light-Alloy Casting
in building the instrument panel structure for Rolls-Royce.
* Leadership in production technology thanks to in-house know-how.

Magnesium is not only one of the most common elements in the world, but can
also be recovered, inter alia, through electrolysis. In its pure form, with a
density of 1.81 grams per cubic centimeter, magnesium offers a significant
advantage over both aluminum (density 2.68 grams/cubic centimeter) and steel
(density 7.87 grams/cubic centimeter) in terms of weight.

Magnesium - the ideal lightweight material?
Magnesium nevertheless has some features, which limit its possible use in the
automobile. Whenever it comes into contact when wet with other materials such
as iron, for example, magnesium is subject to a greater risk of corrosion.
Depending on the alloy used, a further point is that magnesium may tend to
creep under load at high temperatures. This is why magnesium in its pure form
or as a conventional alloy is not suited for permanently conveying high loads
and forces of the kind typically encountered in central components of the
engine. So far the use of conventional magnesium alloys has been limited to
components and applications subject to only a minor risk of corrosion as well
as thermal or mechanical loads kept to a minimum.

A milestone in lightweight technology: the world's first composite
magnesium/aluminum crankcase.

In the meantime the BMW Group has made a genuine breakthrough in technology,
developing the world's first composite crankcase made of magnesium with a
cast-in aluminum insert. This makes the BMW Group the first manufacturer of a
water-cooled combustion engine using the substantial weight benefits of
magnesium and at the same time overcoming the drawbacks of this very light
material. This composite crankcase for
a straight-six power unit is a series-based development scheduled to enter
regular production in BMW power units in the next two years.

Weight down by one-quarter.
Substituting aluminum by magnesium, BMW is able to reduce the weight of the
crankcase in the same design and structure by approximately 10 kilos. Clearly,
this offers a further potential for reducing the weight of future car
generations, always in consideration of the fact that less weight means greater
fuel economy. And less weight at the right point also improves the dynamic
performance and agility of a car.

A detailed look at the composite crankcase.
A crankcase made of pure magnesium or a conventional magnesium alloy is not
suitable for series production for the simple reason that the limited transfer
of forces and the associated creeping effect of the material as well as the
surface qualities of the cylinder liners present insurmountable obstacles.
Precisely this made it essential to find a combination of materials and
components designed to meet all requirements and demands in practical use. In
principle, the structure and configuration of this unprecedented composite
crankcase follows the design of BMW's new generation of four-cylinder power
units with VALVETRONIC valve technology. And to optimize the engine's
structural stiffness, acoustics and fatigue strength, the crankcase is split
down the middle on the level of the crankshaft bearings.

The differences versus an all-aluminum engine become quite clear right from the
start, the composite crankcase incorporating an aluminum insert surrounded by
magnesium in the upper section of the cylinder liners and water cooling jacket.
With this aluminum component efficiently resisting even high thermal and
mechanical loads, it comprises the bolts and connections for the crankshaft
bearings and cylinder head. The magnesium housing surrounding the aluminum
insert, in turn, serves primarily for the oil ducts and the connection of
ancillary units. Various functions have been integrated here and the number of
ancillaries reduced, the gearbox cover as well as the mounts for both the
alternator and vacuum pump being integrated in the housing. The lower section
of the crankcase, in turn, also made of pressure-cast magnesium, comprises
cast-in sintered steel inserts for the crankshaft mounts.

New sealing systems have been developed for this new engine concept excluding
the risk of corrosion along the seams. To avoid contact corrosion between
magnesium and steel, finally, the crankcase features special high-strength
bolts made of aluminum.
Magnesium alloy with new features and properties. Apart from production and
procedural know-how combined with maximum dependability in all processes, the
right combination of materials is an essential prerequisite for successfully
building a truly innovative composite crankcase.

After thorough basic research in close cooperation of specialists in materials
technology, engine development and light-alloy casting at the BMW Landshut
Plant, the experts have modified an aluminum alloy to meet the specific
requirements of a crankcase in the power unit. This re-defines the borderline
for the use of this material and opens up completely new, unprecedented areas
of application.

In developing this new material, the focus in particular was on creep
resistance, corrosion behavior, thermal and mechanical loads, casting behavior,
the avoidance of contact corrosion between magnesium and other materials, as
well as prevention of any leakage or spillover from or to the engine. The
skills required in mastering the processes involved were established at the
same time in the Pressure Casting Technical Center of BMW's Landshut Plant and
the complex production process was secured accordingly. Specialists within the
BMW Group itself developed the know-how required for the materials and
processes involved, learning to mastermind all process requirements.

The big challenge: casting the composite crankcase.
Developing the technology for production of the composite crankcase, the
light-alloy foundry at BMW's Landshut Plant faced new challenges in process
engineering. Particularly the need to handle the different thermal elongation
of aluminum and magnesium called for a high standard of technology requiring,
in turn, all the experience of BMW's foundry specialists. With the newly
developed casting process, the magnesium jacket shrinks on to the aluminum
insert while cooling, the core being permanently anchored within the magnesium
jacket by ribs with positive engagement.

With aluminum and magnesium requiring roughly the same period to grow solid at
a temperature between 500 and 600 ºC, the actual casting process calls for very
elaborate thermal management to ensure that the mold and the insert are heated
up and cooled down in parallel at exactly the right time.

Impressive production technology.
The new crankcase is manufactured on one of the world's largest
pressure-casting machines at the Pressure Casting Technical Center of BMW's
Landshut Plant. Following an automatic process, a separating agent is first
applied on the two-piece mold weighing almost 60 tons, before the aluminum
insert is placed in position and the mold is closed. The pressure-casting
machine controlled in real time then compresses the liquid magnesium at a
temperature of approximately 700 ºC and a pressure of almost 1,000 bar into the
remaining cavities in the mold within a mere 6/100ths of a second, the two
halves of the mold being held in place under a force of approximately 4,000
tons. This makes the metal turn solid within 10 seconds, a robot then removing
the crankcase from the mold after 20 seconds. Following the casting process the
crankcase goes through
a process of heat treatment prior to further machining and finishing in order
to reduce internal tension.

Magnesium in series production.
The use of magnesium does not call for any significant changes or modifications
of the production process - neither in the foundry nor in the subsequent
process of machining the combination of materials - in comparison with
all-aluminum components, since magnesium is easy to machine and process with
maximum efficiency. In the use of coolants and lubricants, in turn, and in the
disposal of chips and metal residues, the BMW Group benefits from many years of
know-how provided by experienced partners in the materials and automobile
industry. Materials are therefore recycled with optimum efficiency in the
interest of the environment and superior economy.

Full