Early indications show the limited-edition model will be priced around £250,000. BMW is insisting the high price will not only buy exclusivity, but put drivers in command of the first true on-road Formula One driving experience.

Due to see production as early as July 2002, the M2 looks certain to put BMW at the very pinnacle of the supercar world. With its scissor-style doors and mid-engined layout, the new model will build on lessons learned from the 230mph McLaren F1, the German firm's last excursion into this sector in partnership with the motorsport legend. It will also feature some of the most advanced technology ever put into a road car. But although the BMW V12-engined F1 had it virtually all its own way in this elite segment of the market, this beast will be fighting a tidal wave of competition from some of the biggest names in the industry.

Audi, Volkswagen and Bugatti are only three of the makers that are considering ambitious new supercars. Audi recently unveiled its V16-engined Rosemeyer concept, while VW pulled the wraps from its W12 Coupé and invited Auto Express to drive it in 1998. Bugatti, meanwhile, has been working flat-out to ready its Veyron 16/4 project for production in 2003.

At the same time, Mercedes has confirmed it is building its stunning SLR – with help from McLaren – while German rival Porsche is serious about putting the Carrera GT into limited production. To ensure the BMW has got exactly what it takes to compete with the very best of the best, the firm will not only fit its awesomely potent Formula One engine, but use a magnesium and aluminium chassis with carbon fibre body panels.

Overall, the car should weigh little more than 1,200kg – that's a mere 50kg more than the McLaren F1 and 50kg lighter than Porsche's forthcoming Carrera GT. Power will be fed to the rear wheels via a six-speed sequential transmission and an ultra-advanced traction-control system will help regulate the fearsome power on tap. Performance will be breathtaking. With a rev limit as high as 15,000rpm, the 0-60mph sprint should be achievable in less than four seconds thanks to an advanced engine-management system that allows the driver to hold the throttle to the floor while changing gear. Ceramic brakes like those fitted to the Formula One car are expected to be used, coupled with ABS to help control impressive straight-line performance.

Inside, everything will be focused on the driver, with a simple rev counter and speedometer dominating the dashboard. As well as deep bucket seats, the pilot will be given a racing harness-type seatbelt. Airbags will also be fitted, plus an integrated full rollcage for both ultimate body strength and passenger protection.