And it will go on sale in 2013 as part of a radical brand of BMW electric/hybrid cars.
The brand, launched this week in Munich, will be called BMWi - with the first models an electric city car, the BMW i3, and the high-performance i8 coupé.
The i3 will be a zero-emission all-electric supermini with room for four and a range in excess of 100 miles. It is aimed at commuters around the world. But the car that will change the image of electric motoring will be the stunning i8, a four-seat coupé with supercar performance, but fuel economy of nearly 90mpg, a range of 435 miles and CO2 emissions of less than 100g/km - and that means no road tax.
The incredible performance comes from a relatively small 1.5-litre turbo diesel, boosted by two electric motors, that delivers 0-62mph in 4.9 seconds and a top speed of 155mph. Expect a price around £100,000 plus.
BMW's Sales and Marketing boss Ian Robertson said the new brand and cars would "radically alter the motor industry and set a new benchmark for premium electric cars".
He added: "These cars and the i brand will shift the game and shape the future of motoring.
"It will change the way we build cars with new materials and production techniques and the way we drive."
He said it was too early to talk prices for the new cars but said that the i3 - despite being a small city car - would have a premium price and cost more than such rivals as the Nissan Leaf and Chevrolet Volt.
Luxury The ground-breaking brand follows a decision at the weekend by Rolls- Royce, also owned by BMW, to develop an all-electric Phantom as the first ultra-luxury electric car.
And BMW are also working on plans for an electric Mini - the German Group own Mini - to complete their electric range.
To that end BMW have been testing a fleet of 600 prototype electric Minis in the UK and around the world for the last two years.
And research from those drivers who took part in the Mini electric trials has been vital in developing the BMW i3 city car.
