A transfer case is a device that splits the output of the transmission for the front and rear wheels. To give the vehicle four wheel drive or all wheel drive depending on how the vehicle uses it. BMW uses a few different transfer cases through out its all wheel drive vehicles. The main transfer case design we will be talking about is x drive.
The older transfer cases were not as problematic as the newer ones, mainly because they are very simple units compared to recent models. The older units were either chain drive or gear to gear driven. As long and the fluid was changed at the appropriate intervals then the chances of having issues was quite small. These type of units were in the e46, e83, e53, e30. Some of the life cycle impulse (LCI) of those models did get a x drive transfer case during the update.
The x drive transfer case was developed for one main reason, saving fuel economy. The transfer case uses a wet clutch to be able to split the power and the vehicle needs it for the front wheels. Under normal driving conditions, in a straight line with no wheel slippage, most of the power is sent to the rear wheels. Once the car senses wheel slip it will send power to the front wheels and do a 50/50 split between front and rear. The wet clutch is activated by electric motor and ball and ramp system. The early x drive transfer cases had control module separate from the electric motor. In newer models, the module and electric motor are all together.
The transfer case can fail and in most cases does without any warning lights. Normal sign of failure is a shudder when taking tight turn either direction. This is a sign of the wet clutch being stuck engaged. This occurs because; normally when turning the transfer case will disengage the wet clutch to allow the front and rear wheels to turn at different rates. Another common sign of failure is a drivetrain vibration when accelerating. I have even seen a complete internal failure where the transfer case would no longer drive the rear wheels, just the front. The easiest way to diagnose; if the transfer case is the issue is to unplug the electric motor and drive the car. If the issues go away or change, most likely the transfer case is the issue and should be replaced. In my experience, replacing just the electric motor does not solve the issue. When you replace the transfer case with a new motor because of the module it will need to be programmed.
The best way I have experienced to avoid a transfer case failure is to do proper maintenance. BMW’s system for when to service the transfer case is flawed. Your vehicles transfer case module will set a fault code when a service is due. Problem is this fault does not set a warning light or message. The only way to see if it is set is to do a fault memory read out. Many people never know when to change the fluid on the unit. And by the time they find out it’s too late and the damage is done. I recommend doing a fluid change every 40-50k miles. The early models were easy and had a drain and fill plug. Drain fluid out and fill until fluid spills out, very simple task. For engineering reason unexplained, the new transfer cases don’t have a drain plug. BMW states you need to remove the transfer case and tip it on its side to get the fluid out. I have found in the field to use a suction pump that has a small enough hose to suck the old fluid out and fill with new fluid work just as well. Starting with the G12 the latest transfer case will need software to open up and plunger and chamber system to get all the fluid out. The reason for this new system was to improve fuel economy again.
I hope after reading this you can diagnosis potential issues with your transfer case. Secondly, be able to prevent any issues with your transfer case for many years to come.