The history of the X5 begins in the late 1990s, when Chris Bangle drew the first sketches from his Designworks studio in California. In many ways, the current car closely resembles these initial sketches.
The takeover of Rover proved to be very beneficial for BMW in the development of the X5. BMW engineers were able to look and use Range Rover technology and parts in the development of the X5-one such example would be hill descent control. In many respects the X5 was also influenced designwise by its British counterpart; in this case the X5 got the two-piece tailgate straight from the Range Rover. Many parts and electronics were also taken directly from the E39 5 series parts bin to save costs.
In contrast to the Range Rover models, however, the X5 was designed as a sporting car. BMW reportedly worked hard to ensure it was referred to as an SAV (Sports Activity Vehicle) instead of an SUV (Sports Utility Vehicle).
Even though the X5 was a four wheel drive vehicle, BMW chose from the start to route 60% of the engine's torque to the rear wheels, making it feel as close as possible to the company's rear-wheel drive sedans. Many reviewers commented on its road and track "feeling", and as time passed many other manufactures have caught onto this breed of SUV (e.g. Porsche Cayenne).
The X5 has been criticized for having low interior volume for its size - both the smaller BMW X3 and the 5 Series (Touring) have greater interior volume. The next generation X5 is rumored to rectify this problem.
For 2004 the X5 was refreshed with new headlights, a few new exterior colors, a new four-wheel drive system and upgraded engines. The exterior touches kept it fresh and gave the X5 a more aggressive look. The grilles were enlarged, as well as their actual slats being modified in a 'flame surfaced' style. In keeping with the E39 refresh of 2001, the 2004 X5's headlights got "angel-eyes" (rings or halos around all front headlamps). The taillights also got an E39-style refresh treatment and the exterior glass went from a "dotted" pattern to a cleaner one of "lines". BMW invented a new four-wheel drive system dubbed xDrive shared both in the X5 and X3 in 2004. Instead of using the previous X5 system which consisted of power being split 60-40 (rear wheels-front wheels) and DSC to brake wheels losing traction, xDrive could variably cut off power to the front or rear axles in a matter of milliseconds, while transferring 100% of the engine power to either, thus allowing the vehicle to regain traction quickly.
In terms of engines, the X5 got the new 4.4i engine which debuted in the 2002 7-Series. This raised output from 290 to 325 hp (242 kW). Also from April production, a new X5 4.8is was offered (see below), giving the driver 265 kW (355 hp) and making it the 2nd fastest SUV behind the Porsche Cayenne Turbo.
+ Soft-boot close feature (the top part of the trunk pulls itself closed)
+ Trailer Stabilization Control
+ Adaptive Headlights (available only with xenon HID headlamps; these swivel with the direction of travel of the car)
Originally announced in the end of 2003 along with the rest of the X5 refresh, the X5 4.8is first started shipping in April 2004. In had a new larger 4.8 L engine (which replaced the 4.6 L engine), and was also later used in the 2005 750i/Li. It also included a slightly modified bodykit (parts of the bottom bumper became painted the body color), 20" wheels, and along with the 4.6is, were the only X5's ever to have a large chrome-tipped exhaust which hid the quad pipes.
