For an outside viewer of the german PhD system some points have to be mentioned:

• Germany produces over the average PhD graduates. This is partly caused by most of the research/lab work at public universities/institutes done by cheaper PhD students with 50-100% TV-L contracts.
• Normally one is only allowed to start a PhD with a master title, so 3 years can be enough to reach the PhD
• Beneath the universities there exist also many "Fachhochschule" (Universities for applied science, strongly collaborating and cooperating with Industry partners, not doing fundamental research). Master graduates from Fachhochschulen are normally not allowed to start a PhD at a university. The Fachhochschulen themselves don't have the right to give the PhD title, also many of them want to change this, while the Universities want to keep the sole right.
• there exist branches like medidcine in which a "Dr. med" title, the german equivalent of the PhD, is often given within 6-12 months for much less experimental/evaluation/statistical work than a natural scientist or engineer has to do. So there exist already very unfair and different measures to achieve such a title, being the qualification step before starting habilitation or junior professorship or tenure programme to become professor.

Now, concerning the case of BMW, I find it personally rather amusing than shocking which road the german PhD title and the academic system is apparently going here. One can be unsettled by this, when in former days the requirements were higher to earn a PhD and its reputation might decline therefore. On the other hand, times and academic standards change over time and countries.

The remaining question is, what will a PhD title based on research & development in such a programme be worth in 3, 10, 30 years? I don't think much apart from the formal value at a company like BMW or its competitors. But it might be rather conterproductive for a academic career and the journals in which you can possibly publish. If you do your research work at BMW or at an institute being paid fully by BMW for this research work, it should practically not make a big difference for the output. But, very likley, a professor supervising such a work, has to give away choice and responsibility what the content of the research work will be.

So to sum up, there is nothing illegal or in principle to critisize in this case, but the limitations/drawback to pursue such a PhD programme have to be taken into account by the PhD student. And in Germany, the Dr. titles of different study branches already have a very defragmented and intrinsic value due to very different requirements, contracts, practices, average period and level of (fundamental) "research" work in different branches.

For an outside viewer of the German PhD system some points have to be mentioned:

• Germany produces over the average PhD graduates. This is partly caused by most of the research/lab work at public universities/institutes done by cheaper PhD students with 50-100% TV-L contracts.
• Normally one is only allowed to start a PhD with a master title, so 3 years can be enough to reach the PhD
• Beneath the universities there exist also many "Fachhochschule" (Universities for applied science, strongly collaborating and cooperating with Industry partners, not doing fundamental research). Master graduates from Fachhochschulen are normally not allowed to start a PhD at a university. The Fachhochschulen themselves don't have the right to give the PhD title, also many of them want to change this, while the Universities want to keep the sole right.
• there exist branches like medicine in which a "Dr. med" title, the German equivalent of the PhD, is often given within 6-12 months for much less experimental/evaluation/statistical work than a natural scientist or engineer has to do. So there exist already very unfair and different measures to achieve such a title, being the qualification step before starting habilitation or junior professorship or tenure programme to become professor.

Now, concerning the case of BMW, I find it personally rather amusing than shocking which road the German PhD title and the academic system is apparently going here. One can be unsettled by this, when in former days the requirements were higher to earn a PhD and its reputation might decline therefore. On the other hand, times and academic standards change over time and countries.

The remaining question is, what will a PhD title based on research & development in such a programme be worth in 3, 10, 30 years? I don't think much apart from the formal value at a company like BMW or its competitors. But it might be rather counterproductive for a academic career and the journals in which you can possibly publish. If you do your research work at BMW or at an institute being paid fully by BMW for this research work, it should practically not make a big difference for the output. But, very likely, a professor supervising such a work, has to give away choice and responsibility what the content of the research work will be.

So to sum up, there is nothing illegal or in principle to criticize in this case, but the limitations/drawback to pursue such a PhD programme have to be taken into account by the PhD student. And in Germany, the Dr. titles of different study branches already have a very defragmented and intrinsic value due to very different requirements, contracts, practices, average period and level of (fundamental) "research" work in different branches.