Where the motors differ from one another is in their displacement, boost pressure, turbo/manifold design, redline, and of course this all affects the power output. Let's take a look at the specifications of the motors at a glance:
On paper the Mercedes motor is rated higher. 429 horsepower and 516 lb-ft of torque in stock form. The N63 on the other hand is rated at 400 horsepower and 450 lb-ft of torque. The Mercedes motor also has slightly under 300cc's more displacement and the stock turbos max boost pressure is 12.9 psi versus the BMW N63's 11.6 psi max boost pressure. The compression ratio on the Mercedes M278 is also higher at 10.5:1 versus 10.0:1 for the BMW N63. On paper, everything favors the the M278 except for the redline with displacement, boost, and the compression ratio all in its favor.
In practice, however, the N63 is a more efficient design. Why? Well, part of it can likely be attributed to the heads/valvetrain but it is really the exhaust manifold and turbo setup:
The M278 uses more traditional turbo packaging. The N63 V8 has the turbos top mounted in the valley making for a very efficient setup where exhaust gases flow a short distance. This reduces spool time and also makes for a system where the exhaust gas flows more freely. This setup could actually be more efficient than it is as applied in the N63. What is meant by this statement is that this same basic design in the M motors such as the new F10 M5 gets a pulse tuned cross engine exhaust manifold with twin scroll turbos pictured below:
In the N63 and M278 standard turbos are used with a single exhaust passage that do not get dual exhaust pulses. They share a traditional setup in this regard but the N63 manifold setup is still a far more efficient design. The proof is in the stock and tuned dyno results below.
Stock and tuned dyno results for the M278 and N63:
Let's start with two sets of dyno numbers for the M278 motor on an automatic W212 E550 stock and with a tune only on 93 octane pump gas (courtesy of GermanBoost Network Premier Vendor Velos Designwerks and Renntech):
The baseline is a respectable 379 wheel horsepower and 425 wheel torque from Velos and 396 and 441 wheel torque from Renntech. The Renntech cars baseline is much stronger for whatever reason (weather, break in, etc.). The numbers correlate well using traditional drivetrain losses with the crank ratings as given by Mercedes and the car is even slightly underrated. With the Velos Designwerks tune this output rises to 425 wheel horsepower and 483 pound-feet of wheel torque.
The Renntech tune is a much newer version of their tune and eclipses their past efforts which previously hit 447 wheel horsepower and 441 wheel torque. Their newest tune removes certain limits in the ECU and they were able to increase their numbers to an impressive 489 wheel horsepower and 510 pound feet of torque.
The N63 on the other hand despite its lower ratings, lower displacement, lower compression ratio, and lower boost pressure matches the M278 in stock form. Here are two dynos again from Velos Designwerks in order to minimize variables. The first dyno is from BimmerBoost.com members @Jimefam 's car which is an automatic 550i with AR Design downpipes. The second car is a 550GT that is completely stock and automatic as well. Both cars run on 93 octane:
The first dyno shows 386 wheel horsepower for the baseline and second shows 396 wheel horsepower. This would make the N63 V8 severely underrated by BMW although BMW has established a precedent of underrating the new turbo motors greatly. A recent dyno of the new F10 M5 reflects this as well.
Torque numbers for the motors are 431 and 429 to the wheels respectively exceeding the lower baseline M278 dyno in stock form by about 12 wheel torque despite the M278 advantage of 66 pound-feet of torque on paper.
When tuned by Velos the M278 horsepower and torque numbers rise to 425 and 483 respectively at the wheels. The N63 goes to 441 wheel horsepower and 490 pound-feet of wheel torque as shown in the first N63 dyno graph. In the second graph featuring a 550GT stock without downpipes those numbers go to 461 wheel horsepower and 501 wheel torque. Despite which N63 one feels is a more accurate representation both exceed the lower M278 baseline and are pretty much a toss up with the higher M278. We might as well call this a draw.
Internal strength, power potential, and the better design:
Ultimately, the two are very strong but the N63 has certain design aspects working in its favor. Velos Designwerks mentioned regarding the 550GT which hit 461 wheel horsepower that the turbos are about at their limit. With bolt on's some more horsepower should be able to be extracted (race gas as well) but that is about the tune only limit. The M278 originally did not appear able to match it as the Velos and early Renntech tune show but with the new tune Renntech is able to push the M278 to just under 500 wheel. Tune only, the M278 appears to be slightly more capable although both sets of turbos appear to be reaching their limit.
The N63 also has the possibility of mimicking the turbo and manifold setup of the M motors. As mentioned earlier, the M Motors (Designated S63 V8) use a twin scroll turbo setup with a manifold feeding two exhaust gas pulses. If a tuner is able to retrofit this setup to an N63 the motors will leave the M278 in the dust in the aftermarket. Top mounted turbos also make for easier turbo upgrades.
M278 internal design:
That is not to say the M278 is a bad design by any means. It is an excellent motor. The motor is stout based on the previous generation naturally aspirated M273 engines with 5.5 liter displacement used in 550 models. The big brother M157 is based on the M278 design but with greater displacement and other associated changes. The rods in the M278 are shortened a couple millimeters and the piston crowns are 4mm thicker than the M273 to make for a strong bottom end considering the relatively high compression ratio and amount of boost.
The motor is also sleeved with silicon-aluminum cylinder sleeves which are more than a pound lighter than convention iron sleeves. They also reduce friction by up to 50%. The crankshaft is forged steel with eight counterweights and five main bearings inspired from Mercedes Motorsport programs. The rods are forged steel pieces. They are forged as a single piece then hydraulically cracked which results in stronger rods than those machine cut then reground.
So if one can change the turbos to larger units the motor will be able to take quite a bit of power thanks to its very stout design. The problem is that they are welded to the exhaust manifold and there is an integrated catalytic converter right behind them also welded in heating quickly for emissions but sapping power. The design also dictates bypass valves versus blow off valves which is simply a design choice. An air-water intercooler is used.
If the aftermarket creates exhaust manifolds and turbos for the M278 it will become a beast. Renntech believes over 550 wheel horsepower will be possible making for a mini-M157 in a way. Unfortunately, it will likely be in limbo for quite some time just like the M275 V12 which also had the turbos welded in. That motor debuted in 2003 yet still there are not many viable solutions for the exhaust manifold and larger turbos. It will take a dedicated tuner to do this for the M278 and the demand is simply not there... yet.
Both motors are great examples of factory twin turbo direct injected V8's but the BMW design is a little better and more efficient. Not to mention BMW upped the output on the N63 with the N63TU now rated at 445 horsepower for 2013 on. Since the N63 already was just about even to begin with there will now be a slight disparity between the two favoring the N63. The N63TU adds Valvetronic which likely will make the aftermarket tuning a bit more complicated. With a tune, it likely will end up in a similar place the N63 already does. The new M5 features Valvetronic so it is logical that N63TU owners with Valvetronic will look towards retrofitting M5 components while owners of the previous N63 without Valvetronic will look toward retrofitting S63 components form the X5M and X6M which do not have Valvetronic.
Regardless, the N63 appears to have the easier tuning path in the future versus the M278 simply due to being a more efficient design having the same basic layout as the S63 M V8's which only change the manifold, turbos, piston compression, and tuning. The M278 unfortunately has larger differences than its big brother M157 meaning it will have more pieces that need to be changed such as those that are welded together like the turbos and manifold. Once can not simply change the turbos in the M278 and keep the stock manifold whereas in the N63 this is a possibility. The M157 is a similar motor to the M278 with more displacement so the M278 may see some trickle down development. Both do have great potential and are excellent motors which will be a staple of discussion on BimmerBoost and BenzBoost for some time to come. Not to mention they have a lower price point of entry versus their M and AMG counterparts.