VII. Disruption and Experimentation: The BMW E65/E66 7 Series
When BMW unveiled its fourth-generation 7 Series (chassis E65 for standard wheelbase, E66 for long wheelbase) in 2001, it marked a watershed moment in luxury car design and engineering. The new 7 Series replaced the beloved E38 model with a product engineered to redefine the segment through aggressively bold styling and cutting-edge technology. It was the first BMW to debut the now-ubiquitous iDrive infotainment system and to incorporate a host of innovations: active anti-roll suspension, an electronic key fob, night vision, and more. Mechanically, the flagship 760Li introduced an all-new N73 6.0‑liter V12 engine with direct fuel injection and Valvetronic variable lift, replacing the outgoing 5.4‑liter M73 V12 that had powered its predecessor. The E65’s arrival thus represented a comprehensive transformation of BMW’s luxury flagship—one that would prove as provocative as it was pioneering. This retrospective examines the E65/E66 generation’s technical innovations, aesthetic revolution, and market impact, assessing how it challenged industry norms and shaped the next generation of luxury sedans worldwide.
Under the leadership of BMW design chief Chris Bangle, the E65 7 Series broke decisively with the past. Designer Adrian van Hooydonk’s exterior styling—approved in 1998—introduced what Bangle termed “flame surfacing,” with convex–concave body panels and an unconventional rear-end treatment. The tall, two-tier trunk line was derisively nicknamed the “Bangle Butt” by critics. This high decklid, along with a raised hood and prominent eyebrows atop the headlamps, stood in stark contrast to the restrained elegance of the 1990s E38 7 Series. Many observers initially found the new look jarring, even “ugly,” and a storm of controversy ensued in the press and among BMW loyalists. Notably, Los Angeles Times critic Dan Neil went so far as to include the 2002 7 Series in his list of “50 Worst Cars of All Time,” citing its styling.
BMW’s leadership, however, stood firmly behind the forward-looking design. Management had sought to propel the brand’s image into the future, even if it meant challenging traditional aesthetics. Bangle later explained the functional rationale behind the high trunk and layered rear geometry: new safety regulations and the requirements of a larger V12 powertrain forced a higher hoodline (about 6 cm taller than before), and aerodynamics in turn dictated a higher rear deck to maintain an efficient profile. Additionally, trunk capacity needed to accommodate multiple golf bags—a key demand for luxury sedan buyers—which the unique “bustle-back” design achieved. In Bangle’s telling, these engineering and marketing constraints “came to be” the signature rear look, and he confidently predicted to skeptical American dealers that “in a few years all luxury cars will look like this.” The dealers, he recalled, agreed and lent their support. Indeed, by mid-decade his prediction proved prescient: Mercedes-Benz’s 2006 S-Class (W221) and others adopted higher rear quarter lines and layered trunk forms, validating BMW’s once-radical departure.
Inside, the E65’s design was perhaps even more of a design statement. BMW abandoned its hallmark driver-angled center dashboard; for the first time since 1975, the dash was fully symmetrical. This was done to accommodate the central iDrive screen and controller concept (discussed below), and to create a more open, lounge-like cabin. The traditional console-mounted gear selector was eliminated—gear selection moved to a small stalk on the steering column—freeing space in the center console for dual cupholders and the iDrive knob. Controls that had long been familiar were relocated or reimagined: for example, power seat switches moved from the seat side to the top of the center console, a change that perplexed some reviewers.
The overall interior aesthetic emphasized minimalist surfaces and technology integration over the classic driver-centric cockpit. This philosophy, summed up by BMW as “oben anzeigen, unten bedienen” (“show it up top, control it down below”), aimed to keep the driver’s eyes on the road by moving visual information to the upper display and physical controls to the lower console. The result was a dramatic rethinking of luxury car ergonomics, though in the face of substantial criticism—traditionalists lamented the loss of the intimate, angled dashboard and found the new layout unintuitive at first encounter. In time, however, the E65’s interior would be recognized as the first iteration of a modern luxury car cockpit, one that prioritized seamless digital control and an uncluttered design over old norms.
Beneath its polarizing sheetmetal, the E65 generation heralded sweeping engineering changes for BMW. Foremost was the debut of the N73 V12 engine in late 2002 as the heart of the new 760i and 760Li models—a 6.0 liter all-alloy V12 that replaced the outgoing 5.4 liter M73 V12 from the 2001 750iL. This change represented a major technological leap. The M73 had been a traditional 12-cylinder with two valves per cylinder and multi-point port fuel injection, evolved from BMW’s original 1987 V12; by contrast, the N73 was an all-new 48-valve DOHC design featuring BMW’s latest innovations in engine control. It introduced Valvetronic variable valve lift to the V12 line and—significantly—was the world’s first production V12 with gasoline direct injection. Combined with a high 11.3:1 compression ratio, this design improved both power and efficiency for the large engine. The N73 also retained dual VANOS variable cam timing on all camshafts, and it was managed by two engine control units (one per cylinder bank) to handle the complexity of its numerous systems. The 760Li’s V12 produced 445 hp at 6,000 rpm and 443 lb·ft of torque at ~3,950 rpm (an increase of roughly 120 hp over the old 5.4 L engine). Impressively, over the broad range from 1,500 to 6,000 rpm, torque never fell below ~368 lb·ft, giving the heavy sedan effortless acceleration. This new flagship engine exemplified BMW’s engineering prowess—journalists noted that the 12-cylinder’s high-tech arsenal (direct injection, Valvetronic, etc.) set new standards, even if in outright thrust it lacked the immediate turbocharged punch of its rivals from Mercedes.
To harness the N73’s power and improve performance across the range, BMW paired all E65/E66 models with another first: a 6-speed automatic transmission by ZF: the ZF 6HP26. This gearbox was the world’s first production 6-speed torque-converter automatic in a passenger car , and it brought improved acceleration and fuel efficiency through its wider ratio spread. The traditional PRNDL shifter was replaced by an electronic selector on the steering column, with the gearbox offering a Sport mode and adaptive shift logic. Combined with the new engines (the V12, as well as BMW’s new N62 V8s with Valvetronic in the 735i/745i models), the 6-speed auto delivered swift 0–60 mph sprints in the low 6-second range for the V8 745i and quicker still—5.4 seconds—for the V12 760Li. Equally notable was the chassis technology: the E65 introduced an aluminum-intensive suspension design and an Active Roll Stabilization system (also called Dynamic Drive) using computer-controlled hydraulic anti-roll bars to reduce body lean in cornering. This active suspension was a major innovation in 2001, giving the big sedan agility closer to a sports sedan without sacrificing ride comfort. An adaptive damping system (EDC-K) and self-leveling air springs at the rear were also available to further balance ride and handling.
Upon its introduction, the 760Li’s N73 V12 faced off against a cadre of flagship engines from other marques, each with its own philosophy. In Stuttgart, Mercedes-Benz had just modernized its V12 a few years prior: the 1999 S600 (W220) debuted the M137 5.8 L V12 with single overhead cams and a unique three-valves-per-cylinder layout (two intake, one exhaust) aimed at improving low-end torque and emissions. That naturally aspirated M137 made about 367 hp—substantially less power than BMW’s new 445 hp N73—but it featured innovations like dual spark plugs per cylinder and even a cylinder deactivation mode for cruising to save fuel. In 2003, however, Mercedes leapfrogged everyone by introducing the twin-turbocharged M275 V12 in the S600 and Maybach, bumping output to roughly 493 hp and a massive 590 lb·ft of torque. This forced-induction onslaught did not go unnoticed in Munich: contemporary reviews of the 760Li noted that while the BMW V12 was impeccably smooth, it lacked “the instantaneous punch” of the new S600, which could summon enormous torque at nearly any rpm. Nonetheless, the N73 was praised for its linear power delivery and a broad plateau of torque that made the heavy 7 Series deceptively quick.
In its triplet competitors the VW Phaeton W12, Audi A8 W12, and Bentley Continental Flying Spur, the Volkswagen Group adopted a unique and innovative approach for its twelve-cylinder engines beginning in 2001. The central innovation was the compact 6.0 liter W12 engine, an engineering novelty that combined two narrow-angle VR6 engines onto a single crankshaft, creating an efficient and space-saving powerplant. It was first available in Audi’s flagship, the D3-generation A8 W12, in 2001. Producing roughly 450 horsepower, the engine’s compact “W” layout—consisting of twelve cylinders grouped into four banks of three cylinders each—allowed Audi and Volkswagen to place it ahead of the front axle without compromising weight distribution significantly compared to their smaller V8 models. Reviewers praised the design’s remarkable compactness and generally smooth operation, though some noted minor vibrations at very high speeds, slightly more noticeable than those typically experienced with conventional V12 designs.
Volkswagen featured this naturally aspirated W12 in its luxury flagship sedan, the Phaeton, introduced in 2002, leveraging the engine’s innovative packaging to deliver luxury performance combined with all-wheel-drive capabilities. Bentley further refined and transformed the W12 in 2003 by adding twin turbochargers, debuting it in the Continental GT, its first new model under VW Group ownership. This turbocharged version notably elevated the power and performance profile of Bentley’s offerings, subsequently extending to the Continental Flying Spur sedan in 2005. The Bentley models, in particular, emphasized grand touring comfort and robust performance, firmly establishing the W12 as a cornerstone of Bentley’s luxury identity. Thus, from 2001 onward, the Volkswagen Group’s diverse implementation of the W12—ranging from Audi’s luxury sedans to Bentley’s high-performance grand tourers—offered an alternative to competitors BMW, Rolls-Royce, and Mercedes, whose strategy relied heavily on traditional V12 architecture focused on advanced engine breathing and inherent smoothness.
Notably, Lexus and Jaguar, the two other key players in the premium sedan arena, did not field V12 engines—a strategic divergence. These choices underscored a split in philosophy: while German manufacturers treated a V12 as the sine qua non of a top-tier luxury saloon—for prestige and smooth power—some competitors chose to pursue efficiency or alternative tech over cylinder count. Curiously Toyota had quietly developed a 5.0 liter V12 (the 1GZ-FE) for its domestic-market Century limousine by 1997, rated at 280 hp to satisfy gentlemen’s agreements in Japan, but it never made its way into a Lexus.
The iDrive Infotainment Revolution: Innovation and Backlash
Arguably no aspect of the E65 7 Series sparked more immediate debate (other than the styling of the trunk) than the new iDrive system, which fundamentally reimagined how drivers interacted with in-car technology. iDrive consolidated audio, navigation, vehicle settings, and communications controls into a single interface centered on a rotary push-knob controller in the console and a dashboard LCD screen. This bold move was a response to the burgeoning complexity of modern luxury cars. BMW engineers had calculated that, by the late 1990s, a fully optioned car had dozens of buttons and switches (around 35 indicator lights and 65 separate controls) within the driver’s reach. The cabin risked becoming an aircraft cockpit of knobs if a new approach was not taken. The solution was iDrive’s hierarchical menu system: instead of a dedicated button for every function, drivers navigated onscreen menus using the knob—turn to scroll, push down to select—with a few context buttons for major categories. The first-generation iDrive in the E65 had a clean controller with no extra keys, just the knob. The display, mounted high in the center dash, was used to “show up top” all the information, while the controller below allowed “control down below” without reaching for scattered switches. Technically, the iDrive system was built on a robust software platform: it ran on a Wind River VxWorks real-time operating system for the main interface, with a separate Windows CE module handling the navigation computer. Such an architecture was cutting-edge for automotive applications at the time, essentially making the 7 Series’ dashboard a specialized computer network.
Upon launch, consumer and press reactions to iDrive were intense and often uncharitable. Many users found the menu-driven interface far less intuitive for simple tasks than the traditional array of buttons. Common functions like tuning the radio or adjusting climate settings, which once required a single press or knob twist, now demanded navigating through on-screen menus using the central controller—leading to a steep learning curve. Early reviews in 2002–2003 were peppered with frustration: Car and Driver noted the “labyrinthine” nature of iDrive and advised that it diverted attention from driving until mastered. Other outlets quipped that even tech-savvy drivers needed considerable time to acclimate, and some less tech-inclined owners were simply overwhelmed. Indeed, the market’s initial resistance was strong: BMW reported that after the E65’s introduction, some buyers deliberately sought out remaining stock of the older E38 7 Series, preferring its conventional controls to the new interface. Anecdotes circulated of high-profile customers (and even BMW’s own executives) being flummoxed by the system during demonstrations. Additionally, the first production year was marred by software glitches—the complexity of iDrive’s electronics led to bugs and occasional system reboots (famously, the Windows CE logo would appear on a crash). In the United States, early 2002–2003 7 Series models suffered enough electronic reliability issues (many related to iDrive and its network of control modules) that BMW of North America took the extraordinary step of buying back some cars and extending the warranty on others to 6 years/100,000 miles. This gesture was meant to restore customer confidence, as the E65 had faltered in initial quality surveys due to the new tech.
Yet, despite the early backlash, iDrive proved to be a trailblazing innovation with lasting industry influence. Over time, many owners did acclimate to the system, and some even grew to appreciate its cleaner, uncluttered design once familiar with its logic. More importantly, rival manufacturers rushed to develop their own versions of centralized infotainment controllers, validating BMW’s approach. Audi’s MMI (Multi-Media Interface) debuted in late 2002 on the new A8, employing a similar knob-and-screen concept but augmenting it with additional shortcut keys for easier use. It ran on a QNX-based OS and was widely seen as Audi’s answer to iDrive, refined in response to the BMW’s critique (for instance, MMI’s four quadrant buttons around the dial directly accessed main menus like Navigation, Radio, etc., addressing the complaint of too many layers). Mercedes-Benz followed with its COMAND APS system and later an iDrive-like central controller in the 2005-2006 S-Class and other models. Once again, BMW’s 7 Series had forced the luxury car segment into the next age: by 2010, a central infotainment interface had become an expected feature of any high-end vehicle, and the paradigm of a large dash display with an interactive controller (or later, touch interface) was standard. BMW itself continually evolved iDrive—the 2008 refresh brought faster hardware and better graphics, and by the 2010s iDrive was widely praised for its matured user experience.
Press and Competition
The E65 7 Series launched into a highly competitive luxury sedan market and elicited a spectrum of responses across different regions and over its lifespan. Initial launch reviews (2001–2002) tended toward a mix of admiration for the 7 Series’ technical achievements and unease (or even scorn) for its design and usability quirks.
In North America, the 7 Series faced perhaps its toughest audience. The United States had been a major market for the outgoing 7 Series, and American luxury buyers in the early 2000s were thought to have conservative tastes—many favored the understated styling of the rival Lexus LS430 or the classic lines of the Mercedes W220. The E65’s debut in the U.S. in spring 2002 was accompanied by a wave of mostly negative media attention, with mainstream outlets even beyond the automotive press commenting on BMW’s new direction. In a 2007 test (above), the E66 745Li came in third of six, and the Audi A8 (second) and Mercedes-Benz S550 (first) shared the podium with the new 7. Car and Driver opined:
BMWs are apparently for smart people. How else can you explain the many puzzling control mechanisms in the 750Li? From the often-dissed but undoubtedly versatile iDrive to the weird seat controls to rear switches that toggle between window and power-sunshade control, the whole car is full of devices that require research and experimentation, but they offer considerable convenience to a resourceful driver once they’re all figured out.
Some American reviewers praised the leaps in performance—noting that the 745i had athletic capabilities unexpected in a 4,500 lb sedan, and that the new V12 760Li was as quick as some sports cars while cosseting passengers in top-tier luxury. Many, however, found no positives at all:
The New York Times in 2002 ran a piece highlighting customer bewilderment with the styling and iDrive, and the only American automotive journalist to win a Pulitzer Prize (Dan Neil) famously declared the E65 7 Series one of the 50 Worst Cars of All Time. Sales data reflected a mixed picture initially—U.S. sales of the 7 Series in 2002 jumped (partly because 2001 had been a short supply year during the model changeover), and the 7 Series actually outsold the Mercedes S-Class in some early years of the cycle, indicating that many American buyers were not turned off by the new BMW despite the noise. Over the full run, U.S. sales of the E65 were solid, though the Lexus LS also gained ground in those years, suggesting BMW traded some buyers who disliked the new approach for new buyers attracted by the innovation. By late in the cycle (2007–2008), sentiment in the U.S. had warmed considerably—many reviewers of the 2008 750Li/760Li facelift noted that time had been kind to the design (or that competitors had “caught up” in styling boldness), and that the iDrive, after updates, was now more manageable. Ultimately, the automotive press landed on “polarizing but undeniably impactful,” and conceded that the once-maligned 7 Series had “redefined what a luxury sedan could be” in terms of technology, echoing the 750iL’s V12 and its effect on drivetrains.
In Europe, where the car debuted at the Frankfurt Motor Show in September 2001 , the press emphasized the shock of the new styling. German media, while proud of BMW’s engineering, did not shy from noting that the styling “greatly contrasted” with its predecessor and risked alienating traditional buyers. Some European customers indeed were hesitant—it was reported that a number of well-heeled buyers in Germany and the UK snapped up the last of the outgoing E38 7 Series or even switched to competitors like the Mercedes S-Class rather than embrace the E65’s aesthetics and iDrive. Nonetheless, sales in Europe picked up strongly by 2002, suggesting that many customers ultimately decided the performance and prestige of the new 7 Series outweighed its controversies. BMW’s production figures show about 50,000+ units annually from 2002 to 2006 for the 7 Series, making the E65 the best-selling 7 Series generation to date at that time. Indeed, despite the early criticism, the E65/E66 went on to outsell its forebear: BMW recorded 343,073 total units produced over 2001–2008, meaning the controversial new 7 Series was a strong marketplace success. A mid-cycle facelift in for model year 2006 likely aided this success by toning down some styling elements (the headlamps and trunk were subtly revised) and updating the iDrive software, which made the car more palatable to fence-sitters.
From a market perspective, BMW’s offerings during this period demonstrated a clever balancing act. The E65 7 Series, priced and positioned far below Rolls-Royce, took on Mercedes, Audi, Lexus, and Jaguar in the premium segment, while Rolls-Royce took on Maybach, purchased by Mercedes in 1960 and resurrected to challenge Rolls-Royce. Mercedes had hurried to launch the Maybach 57 and 62 in 2002 using a modified W220 S-Class platform and its twin-turbo V12, essentially to prevent Rolls from having that niche to itself. In the end, Rolls-Royce won that battle—the Phantom was praised as a proper inheritor of the Rolls legacy and saw stronger sales and brand cachet than Maybach. Mercedes’ attempt at the super-luxury market struggled and eventually ceased production in 2013, losing over €330,000 on each of the 3,321 neo-Maybachs sold. For BMW, having the E65 7 Series and the Phantom simultaneously showcased the company’s multi-tier luxury strategy: the 7 Series would push technological innovation into relatively higher-volume production, while Rolls-Royce would represent the untouchable peak of craftsmanship and exclusivity, both fortified by shared engineering excellence. The N73 V12 thus became a linchpin of BMW Group’s luxury dominance—one engine, two interpretations, powering both the sharp-handling Bavarian sedan and the stately British limousine. This dual application also reinforced BMW’s reputation; as one retrospective noted, even as BMW introduced radical changes in its own lineup, it was confidently supplying the heart of a Rolls-Royce—a testament to the engine’s quality and the company’s engineering depth.
In retrospect, the E65/E66 7 Series can be seen as a turning point that redefined luxury sedans in the early 21st century, much as the E32 did in the late 1980s. Notably, it was the best selling 7 Series ever. Its legacy is multifaceted—technical, stylistic, and strategic. Technologically, the E65 forced the competition to elevate their game. The car’s introduction of features like a 6-speed automatic, adaptive ride systems, and a modern infotainment controller set new benchmarks that others scrambled to meet. By the late 2000s, every major luxury brand had implemented some form of integrated multimedia interface (Audi MMI, Mercedes COMAND knob, and countless others), and the idea of software-defined car functions became mainstream, vindicating BMW’s early gamble. Moreover, the E65’s showcase of electronics presaged the even more digital future to come—it wasn’t an exaggeration to call it one of the first “21st-century cars” in terms of internal computing power and networked control modules.
Stylistically, the E65’s impact was at first deeply polarizing but ultimately catalytic. Chris Bangle’s design language, criticized in 2001–2003, proved influential as the decade wore on. Competing flagships that launched a few years later carried elements of the 7 Series’ boldness: the 2006 Mercedes S-Class adopted a higher trunk and more pronounced rear fenders (prompting observers to note the influence) , and even Lexus—long a bastion of conservative design—took a slightly more daring approach with the 2007 LS460. In the broader design community, Bangle’s work sparked intense debate on the role of avant-garde aesthetics in luxury cars; it arguably gave other manufacturers “permission” to experiment beyond the safe and formulaic. Many designers in rival companies in the 2000s cited Bangle as having broken the mold—love it or hate it, the E65 demonstrated that risk-taking could generate buzz and differentiate a brand. By the early 2010s, looking back, some critics acknowledged that the E65 had aged better than expected, and that its once-shocking lines now seemed almost tame compared to even more radical designs on the road (for example, BMW’s newest G70 7 Series or Lexus’s ongoing spindle-grille era).
In terms of strategy and market positioning, the E65 taught BMW several lessons that informed its successors. One lesson was the importance of balancing innovation with user experience—the early iDrive snafus showed that revolutionary ideas need thorough refinement and customer education. The E65 generation had a significant role in shaping the next generation of luxury sedans. Its influence can be seen in how its core ideas were adopted, adjusted, or in some cases, avoided by others. Some brands, noting BMW’s mixed initial reception, tried a more gradual approach to similar concepts—for example, Audi’s evolution of MMI and its restrained exterior designs under Walter de Silva in the late 2000s were perhaps calibrated to be innovative yet not shocking. Mercedes, after the somewhat flamboyant W221 (inspired partly by BMW’s boldness), actually took a more conservative turn with the following W222 S-Class (2013) which was sleek but less controversial, suggesting an ebb and flow in design trends that Bangle’s provocation helped to trigger. In essence, the E65 7 Series opened a Pandora’s box of innovation in the luxury segment: once opened, there was no going back to the old simplicity. Every luxury car that followed had to contend with the standard the E65 set—that a top sedan must be a technology flagship as much as a comfort machine, and that design cannot remain static in a rapidly changing consumer landscape. That legacy will outlive even the harshest critics.