BMW M2 will be BMW's weapon of choice for answering your query.
"The time window for this car [was] extremely tight and originally enthusiasm was not apparent until Dr. Kay Segler came to the M Division.
We had initially toyed with the idea of a 1M when we were conceiving the Coupe and did work with evaluation models then using the engine from the E46 and the upgraded E46 CSL engine but it proved to be too heavy for the car.
Originally in the early days of marketing the standard 135i was originally meant to be an M model.
The 1M that stands before you now has had possibly the most progressive stage from thought-production turnaround for a BMW. There had to be a lot of arm-twisting in the BMW Board because of the tight window between generation 1 and generation 2 of the Coupe. The proposal was greenlit when BMW decided to use the Coupe model for the BMW eDrive evaluation. Therefore slightly extending its life cycle.
When I first saw the car it was in a design studio as a full scale clay-model but since then some designers ideas have to make way for aerodynamics and engineering. The initial engine proposal was the N55 but they were having issues that cannot be solved within the time window. BMW greenlit this car in July 2009, now over a year later we see it as it [is] intended, although testing still commences until the launch. Valvetronic was the main cause of the time delay but BMW have spent some time on this and are using the N55 as a basis for the next M3.
The best way to describe the engine of the 1M is a "Hybrid" but in the original form of Hybrid, nothing to do with "alternatives", but it is not a straightforward transplant.
There is a lot of this car that will carry over for the next generation 1M in which that car will switch to four cylinders to which the M Division engineers are already working on the basics without time constraints or restrictions. E82 1M is showing what is possible in a small time-frame. F22 1M will show what is possible once you do not have restrictions."
http://www.1addicts.com/forums/showp...79&postcount=1
Additional 1M development info (repost):
"Development of the engine.
The development time of the engine was very short – engineers took only about a year to build it if not less, beginning in October 2009. In December 2009 the decision was made to build the 1M. Dr. Segler championed the project and made all major decisions. Took around 1 year to develop and test the car. M cars utilize the Nurburgring circuit for extensive testing. All the testing needed to be completed in Spring and Summer [2010] before bad weather starts. He said the engineers and designers worked very, very hard to complete the project. Dr. Segler was emotional and had a few tears the first time he saw the car in completed form. In a broken voice, he said, «we need to build this car».
The 1M is powered by the N[5]4 twin-turbocharged 3.0-liter I-6 engine. For the 1M, the turbocharger, exhaust system, and ECU have been revised to produce 335 horsepower and 332 pound-feet of torque, though up to 369 pound-feet are available temporarily in overboost mode. Redline is found at 7000 rpm."
http://www.bmwblog.com/2011/01/21/bm...-need-to-know/
"Why Valencia Orange?
Ironically, the 1M was first presented to Dr. Segler in Valencia Orange and it was so good that the color made it to the production model. As a fun fact, we observed Dr. Segler was wearing a new Rolex Milgauss which had a black dial with orange second hand and dash marks. True love for the color scheme…"
http://www.bmwblog.com/2011/01/21/bm...-need-to-know/
"Expert dialogue: Why is the BMW 1 Series M Coupé supplied with the Michelin Pilot Sport 2 ex works instead of the current successor product, the Michelin Pilot Super Sport?
BMW M Engineer J. Schwenker: The successor to the excellent PS2 is the PS3. At the time of vehicle testing and homologation, the Michelin Pilot Super Sport was not yet available in this size."
http://www.bmwblog.com/2011/05/24/ex...r-j-schwenker/