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This paper reports interim developments and findings prior to completion of an extensive R&D program that encompasses novel driveline hardware including an electrical modulation element to bias front and rear propeller shaft torque, and the control of this type of active driveline in respect of traction and vehicle dynamics. The AWD hardware has been fitted to a BMW X5 vehicle, with a winter test planned for January 2004 prior to wider demonstration. Specifically, the following are discussed: The AWD market. Functional description of the novel torque biasing hardware including EASY5™ simulation results of the device and its influence upon the relative slip of the front and rear axles. Hardware elements of the variable torque bias coupling. Electrical system. Novel features such as a dual-drive lubrication system, a practical design for driveline torque sensing, and the hybrid vehicle potential of the device with additional connectivity for the e-machine.