The carmaker has set up a new unit called Project i, which stands for innovation, that has begun work on a new car designed specifically to be driven in cities.

BMW chairman Norbert Reithofer described the project as fully independent and “free to act beyond BMW structures if necessary”.

Reithofer said the company did not yet know which alternative drive system or technology the new vehicle would use. “We have decided to focus on a wide range of technological options,” he said. “An electric motor is an option we are looking into. “It does not only work at zero-emission level – the technology is now sophisticated enough to offer driving pleasure.” As yet the manufacturer does not know if the new brand would be a sub-division of BMW or Mini, or stand on its own. The Project i team is also looking into mobility projects for the future, measuring the extent to which people can get around cities individually, given traffic and emissions restrictions.