There are good reasons why BMW AG has avoided building a turbocharged gasoline-production engine since the (European-only) 745i in the early 1980s.

Two reasons, actually: delayed response (aka turbo lag) and high fuel consumption.

The former happens because an exhaust-driven turbine takes a moment after the driver stands on the gas to spool up to speed and begin providing meaningful intake boost. The latter because enthusiast drivers in performance-oriented cars tend to relentlessly flog small-displacement boosted powerplants as they try to make them perform like the larger engines they wish they had.

Believing neither drawback was good for its image or its owners’ satisfaction, BMW turbocharged diesels but avoided gasoline turbo engines for a quarter century. But no longer.

BMW gas-powered turbos are back big time with BMW’s N54 engine, a terrific 3.0L twin-turbo variant of its latest-generation global I-6 engine, which hit U.S. shores in the ’07 335i coupe. It quickly spread to the 3-Series convertible and sedan.

Then it moved up-market to the 5-Series sedan and wagon and X6 cross/utility vehicle and down-market to the ’08 1-Series coupe and convertible. Look for it soon in the next-generation 7-Series and new Z4 sports cars, as well.

Development of this latest-generation inline-six began in 2000 with the naturally aspirated, less-powerful N52 version of the engine. Introduced in Europe in 2004, the N52 boasted an innovative magnesium/aluminum composite block, double VANOS variable valve timing, Valvetronic II valve control, reduced friction and improved efficiency throughout and a host of other improvements.I

Tested in the BMW Z4 roadster, the N52 was a Ward’s 10-Best Engines winner in 2006 and 2007.

Introduced several years after the N52, the N54 turbocharged variant debuted in the U.S. in the delightfully quick 335i coupe.

In addition to direct gas injection and twin turbos the N54 engine has a more conventional aluminum block with iron cylinder liners. The N52’s exotic magnesium/aluminum composite block was deemed not robust enough for the rigors of twin-turbo duty.

Why the change of heart at BMW over turbocharged engines? Engineers concluded that combining new DGI technology with twin small, high-speed turbochargers, finally could eliminate the terrible twosome of turbo annoyances: lag and poor fuel economy.

“With these new and improved technologies, we have overcome the classic disadvantages of turbocharged engines,” says Juergen Urban, BMW North America senior product-development engineer. The former is supplied and was co-developed by Seimens VDO (now part of Continental AG), the latter by Mitsubishi Heavy Industries Ltd.

The most important element of this synergistic combo is BMW’s second-generation, high-pressure 2,900-psi (200 bar) direct-injection system.

“Because you have a central injection needle, you can have multiple injection curves; full and partial range; and arrange it exactly how you need it,” Urban says. “You can do exactly what the engine mapping is telling you is the right thing at that moment. That influences the fuel consumption to a very high degree.”

“We overcome turbo lag with two identical compact turbochargers, which have a very low moment of inertia, spinning in opposite directions, instead of one larger one,” Urban says.

Not surprisingly, development of this muscular modest-displacement six had its share of challenges. “The biggest deal was getting to our self-imposed targets,” Urban says. “For improved performance, we wanted a moderate increase in power and a significant increase in torque, together with improved fuel efficiency.

“We accomplished those very well in my opinion. We have 300 hp at 5800 rpm and 300 lb-ft (400 Nm) of torque over a very wide range: 1,400 to 5,000 rpm.” Environmental Protection Agency fuel economy in the 335i coupe is 17/26 mpg city/highway (14/9 L/100 km).

“One of our biggest challenges was getting these two compact turbochargers into the rpm and temperature ranges where we needed them,” Urban adds. “They work at 200,000 rpm, and they are resistant up to 1,050° C (1,922° F). To get them into these very high areas required intense testing and simulation calculations.”

Is there room for improvement as fuel-economy requirements ramp up in future years? Urban says this configuration is very close to ultimate performance and economy for its 3.0L size, yet contends there will be progress.

Some advances will come from the engine, itself, and some from the vehicles it powers. One future enhancement likely will be the addition of Valvetronic II. More powertrain efficiency will come with new generations of transmissions.

BMW North America Engineering Vice President Tom Baloga says BMW engineers march to an internal mantra of “efficient dynamics,” which means efficiency enhancing changes must not be made at the expense of the dynamic characteristics that are such a large part of the BMW DNA.

“The challenge is that we have a long history of sporty performance,” he says. “Dynamic performance is what separates us from our competition. It’s the reason people are so enthusiastic about our products.

“So the highest priority whenever we make changes, is to not compromise the driving performance. That ‘Ultimate Driving Machine’ expectation does not make it easy for us to improve fuel economy at the expense of anything else. That’s what we always come back to.”

That said, Baloga offers a sampling of potential efficiency improvements, including reducing engine weight and optimizing engine accessories.

“We already have electric water pumps,” he says. “In Europe, we have high-efficiency regenerative alternators that operate only when necessary, are disengaged when not needed to charge the battery and can regenerate electricity back into the battery in a hybrid mode. That feature will migrate to the U.S.,” Baloga says.

“The high-efficiency injection system is being worked on very intensely. We already have the piezo-electric direct injection, and we’re optimizing that further. There’s a lot of work going on in laboratories, where they can video the combustion process through see-through cylinder heads, to improve combustion efficiency. And exhaust systems are being optimized to improve flow and efficiency.”

Also being worked on aggressively is start/stop technology popular in Europe, which can improve fuel economy up to 10% with a manual transmission.

Like all BMW North America engines, the 3.0L twin-turbo prefers premium fuel, but it’s recommended and not required. It has a knock sensor and will compensate for lower-octane gas, so it will run on regular without damage, though performance will suffer somewhat.

Our only complaint about this wondrous twin-turbo six is its lack of an old-fashioned dipstick. Yes, BMW (alone among today’s auto makers, as far as we know) has decided to eliminate its customers’ capability to manually check their own oil. The reasons appear to be packaging, a bit less weight and a curious desire to keep customers in the dark about engine status until an abnormal condition reaches the point where it sets off a warning light.

“There is a sensor that warns the driver if the oil level is low,” Bologa says. “Our philosophy has been to alert the driver if there’s something wrong, or if something needs attention on various systems on the car. We see oil that way as well.”

For that reason, modern BMWs also lack oil-pressure and coolant-temperature gauges, the latter found on most other vehicles today.

Call us old-fashioned, but we want to be able to see a non-normal condition – coolant temperature, oil pressure, oil level, battery voltage – before it escalates to warning-light level.

One final note: While most luxury makers struggle to satisfy today’s corporate average fuel economy requirements, and some pay fines for non-compliance, BMW North America will earn CAFE credits for 2007.

A recent third-party study showed BMW far ahead of all other U.S.-market players in improving its fleet fuel economy by 14% between 1990 and 2005, compared with second-place Toyota Motor Corp. at roughly 3%.

Baloga concedes about half the gain comes from the introduction of the auto maker’s fuel-sipping Mini brand (which counts as part of BMW’s total sales fleet), but the other half of the improvement comes from BMW-brand models.