The new BMW V8 engine will displace four litres, and will replace the Bavarian company's current 4.4-litre V8, which produces between 335kW and 450kW of power.
For Jaguar Land Rover, the new 4.0-litre BMW V8 would supplant the supercharged 5.0-litre V8 that it currently employs.
JLR is working on broadening its modular Ingenium engine range beyond the current 2.0-litre four-cylinder line-up to include a 1.5-litre three-cylinder and 3.0-litre straight-six, with the latter said to be making its debut next year.
This means that there's no cost-effective way for the Tata-owned luxury car maker to develop a new V8 engine, as there's no V6 counterpart with which to share parts and development money with.
For BMW, this deal could give its new V8 a much improved business case, as sales of eight-cylinder models are in decline while development costs are going in the opposite direction.