The BMW E38 model was the basis for the 1995 through 2001 BMW 7 Series automobiles. In early 1988, development began on the third generation 7-series codenamed "Entwicklung 99". From 1989 to 1991 styling work was done, when Boyke Boyer's concept design was chosen and further refined into 1992. In August 1992, the final production design for the new 7-series was approved by the board for production. On April 27, 1993 German design patents were filed featuring a pre-production prototype as a design representation. Patents were later filed on October 27, 1993 in the United States. In early 1994, development concluded and in May 1994, the 1995 E38 BMW 7-Series was unveiled. Production started on February 17, 1994 on pilot production variants, with series production commencing in the second half of the year.
The E38 models were offered with either a five-speed automatic or manual transmission; 730d, 740d, 740i/iL, and 750i/iL had a 5-speed ZF automatic standard. The engine variants in Europe were 725tds, 728i, 730i, 730d, 735i, 740i (4.0 and 4.4 L), 740d and 750i. In the Americas, the models were sold as the 740i, 740iL and 750iL. The 740i/iL were powered by a 4.4 L V8 engine. The base prices in 2001 were US$62,900 for the 740i, US$66,900 for the 740iL and US$92,100 for the 750iL. The considerably rarer 5.4 L V12 was BMW's flagship vehicle, with a 5.4 L 322 bhp (240 kW; 326 PS) engine, also shared by the Rolls-Royce Silver Seraph. V8 and V12 cars had long-wheelbase variants, with the "L" added to the designation. A rare European executive long-wheelbase limousine model was also produced, called the BMW L7, available as both 740iL (4.4 L V8) and 750iL (5.4 L V12) variants. Protection Line light-armored vehicles were built from 2000–2001, again utilizing the 740iL and 750iL platforms, and cost US$99,100 and US$124,400, respectively. These models included body armor, bullet-resistant glass and run-flat tires.
Features of the E38 7 Series included high-pressure headlight washers, auto-leveling xenon HID headlamps, power moonroof, a sound system with 14 speakers and four subwoofers as well as 6-disc CD changer, onboard satellite navigation (1994-1996 MKI based on the VDO-Dayton Carin system, 1997-2000 MKII based on the Phillips system with separate Trimble Navigation receiver, 2001 MKIII based on the Phillips system with internal Trimble Navigation receiver. The E38 7 Series never had the factory DVD-ROM based Navigation system although upgrading to this system is a simple process) and rain-sensing wipers. Other features included an automatic climate control system with separate controls for the driver and passenger, a three-position memory system for the driver’s seat, safety-belt height, new steering wheel and outside mirrors. Front-seat side airbags and a Head Protection System (HPS) were also standard. The 750iL featured an all-leather interior with burl walnut trim, while the sport model featured Sports seats and "Vavona" wood trim . The continuous-motion Active Comfort Seat technology was introduced in 1998 to improve comfort and reduce fatigue for the driver and front passenger.
When the E38 was phased out in 2001 to make way for the new E65, sales of E38s increased noticeably in the car's final months of production as people moved to buy the car before it was replaced. The E65's radical styling and iDrive were not initially well received by consumers, so used E38s increased in value as demand increased. Also contributing to the E38's continued popularity was its appearance in several films such as Tomorrow Never Dies, The Transporter, Bimmer and The Game. The E38 740i featured in the BMW Film Ambush, even though it was the only featured car in the series to be replaced the following year.