Since the release of BMW’s official strategy back in September 2007, media sources around the world have speculated about the carmaker looking to either launch its own new brand or acquire one to help its expansion. Instead, BMW established a new environmental think-tank dubbed 'Project i', whose task is to develop a number of solutions for a vehicle designed for congested city motoring.

The Project i division runs independently to BMW and has been given until the middle of the next decade to develop a concrete solution for a possible range of city cars. The urbanized car for the masses connotation has lead to speculation that the Project i cars will be something low-end and cheap. Nothing could be further from the truth, according to research and development boss Dr Ulrich Kranz who revealed to Germany’s Handelsblatt that BMW will be working on bringing the Project i solutions to market completely in-house.

Kranz explained that the vehicles will be “premium” and not a rival for cars like the Tata Nano. He went on to reveal that the upcoming technologies, which will include electric drivetrains, will be developed by engineers based at BMW’s headquarters in Munich. Furthermore, BMW does not have a battery partner for its electric vehicles although previous reports suggested the carmaker was searching for one.

The first development of Project i is already on the roads in the form of the recently launched Mini-E, which will be used to gather feedback about what urban customers want and need. The eventual city cars could include both three and four-wheel variants and will be built in Germany. Kranz was quick to point out, however, that there was still a lot of work to do and that the first mass produced model won’t be ready for sale until 2015 at the earliest.

No decision has been made on whether a new brand will be launched for the Project i cars but we should know by the end of the year.