In March of 2008 BMW first announced plans to establish a new research division called ‘Project i,’ whose task would be to develop a number of solutions for a vehicle designed for congested city motoring. The goal of Project i was never to exclusively develop one type of vehicle or another, but to come up with a range of technologies BMW could introduce across its fleet or even under a rumored fourth brand.

Now, more than a year down the track, Project i is in full swing and is already spawning its first products. The first development of Project i is the recently launched Mini-E, which BMW will use to gather feedback about what urban customers want and need from a zero-emissions vehicle.

Over the next couple of years BMW will launch a range of near-zero emission vehicles. A new family of vehicles under the Megacity heading will be the second specific platform to come out of Project i and will include both all-electric models as well as high efficiency combustion engines (i.e. compact turbocharged diesel and petrol units).

The first of these will reportedly be a compact hatch that will be smaller and cheaper than the 1-series and Mini Cooper. BMW plans to switch its focus from expensive niche products like the stillborn X7 fullsize SUV and a new super-sports car model to higher volume eco-friendly vehicles.

Speaking with Car and Driver, BMW CEO Norbert Reithofer said the first Project i car will be a three door hatch designed specifically for the U.S. market to meet California’s Zero-Emission-Vehicle (ZEV) requirements that call for large-volume automakers to sell ZEVs by 2012.

"With the Megacity vehicles we are pursuing a radical approach toward establishing a truly sustainable value chain - from development to production and sales,” he said. The car will be able to seat up to four adults and will be powered by an electric motor running on water-cooled lithium-ion batteries. Styling will be BMW-like, with short overhangs, a wide track, and a low roofline. The new car will be a global model and other versions, both petrol and diesel, will eventually be available.

After that the possibilities are endless. There are reports that BMW’s Project i division will eventually launch a new Z2 Roadster, a motorbike, and even a successor to the original C1 scooter.