Rapp Motorenwerke GmbH was one of the first aircraft engine manufacturers in Germany at the turn of the 19th Century and underwent numerous mergers and changes before becoming BMW AG.
Before World War I, Rapp produced both in-line 6 cylinder and V8 cylinder water-cooled aeroengines. The in-line 6 cylinder produced 125 hp @ 215 kg (474 lb); with a 901 cu in (14.8 litre) displacement. Soon, the company made the Rapp II, which increased the power output to 150 hp @ 260 kg (573 lb). Shortly thereafter, early into World War I, the Rapp III 175 hp (actual 162 hp @ 1400 rpm) 295 kg (651 lb) six cylinder aeroengine was manufactured. The V8 they developed was 1201 cu in (19.7 litre), producing 200 hp @ 300 kg (661 lb).
All of Rapp's designs were overhead cam, with forged steel liners screwed to cast steel heads. The aeroengines produced by Rapp were easily distinguished from the other aeroengines (Mercedes, Benz, Basse, Selve, etc.), because the vertical shaft that drove the overhead camshaft came up between cylinders #4 and #5, instead of at the rear. Additionally, all the cylinders were in pairs.
When World War I broke out, German military authorities placed orders with Rapp Motorenwerke. With the influx of capital, the company expanded rapidly and employed 370 workers by 1915. In response to a commission from the German military authorities, Karl Rapp increased the output of his Rapp III engine from 150 to 175 horsepower. However, the strengthening which this called for made the engine extremely heavy, and the engines developed severe vibrations; so much so, that it achieved no commercial success. Even a revised version with four valves per cylinder, the Rapp IIIa, was unable to rectify this situation: the name Rapp had suffered to such an extent that the military departments no longer purchased engines from his company.
On 20 May 1917, Rapp Motorenwerke registered the documentation for the construction design for the new engine, dubbed "type III". Friz' design, (based on Karl Rapp's original design) was laid out as an in-line six cylinder, which guaranteed optimum balance, therefore few, small vibrations. The engine was successful, but the real breakthrough came in 1917, when Friz integrated a basically simple throttle butterfly into the "high-altitude carburettor", enabling the engine to develop its full power high above the ground. This is precisely the reason why the engine, now dubbed "type IIIa", had unique superiority in air combat. Franz-Zeno Diemer, the pioneering aviator and test pilot for the company, sets a new world altitude record with a 32,000 ft (9,760 m) flight in 1919 flying a DFW F 37/III (experimental two-seater, often referred to as the C-IV) with a BMW Type IV aircraft engine. September of the same year, Diemer set another world altitude record- this one for a passenger aircraft (8 people on board, 6,750 meters) in a Ju F-13 powered by a BMW IIIa aircraft engine.
The decision by the Prussian Army Administration to order 600 units of the innovative high-altitude aeroengine (project name "BBE"), prompted reorganizing the legal structure of the company. The aeroengine developed by Friz had turned Rapp Motorenwerke into an essential contributor to the war effort virtually overnight. From the middle of 1917 onward, the business, which would probably have disappeared from history never to be heard of again, now enjoyed the undivided attention of the armed services and other governmental bodies. Large subsidies flowed in and the Munich company received well financed production orders. The recognition that Max Friz gained with his engine made it clear to all the senior managers that up to now Karl Rapp and his inadequate engine designs had held the company back from success. In Friz they now had an excellent chief designer on hand and were no longer dependent on Rapp. Therefore, on 25 July 1917 the partners in the company terminated Karl Rapp’s contract. The end of this collaboration had been coming for a long time. When Rapp’s departure was finally a certainty, another important decision had to be made. If the man who had lent his name to the company was now leaving it, a new name was naturally required. So, on 21 July 1917, Rapp Motorenwerke GmbH was renamed Bayerische Motorenwerke GmbH. It was thus the first company to bear this name and to use the abbreviation “BMW”. BMW AG acknowledges this date to be the official beginning of the company we know today. The departure of Karl Rapp enabled a fundamental restructuring of BMW GmbH. While the development side was placed under Max Friz as Chief Designer, Franz Josef Popp took over the post of Managing Director. Until the end of the war, aeroengines remained the company's only product. The BBE aeroengine project was a big success under the designation BMW IIIa.