Are surprisingly common. The one in the W8 was just my first encounter with one.

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It turns out they have been around since ~1998, and were popular with Ze Germans in the early 2000s.

The main motivations are heat management, packaging, and NVH. A 150+ amp alternator generates tons of heat, which must be dissipated. In a tightly packed engine compartment, there is little available air to cool it. Adding liquid cooling allows the alternator to be placed in warm environments without any ambient cooling air, and survive. Deleting the alternator fan also reduces noise from the engine compartment, which is very important in the luxury cars these are designed for.

Water cooled alternator explainer

Bosch applications list

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