Thankfully it’s trivial to change.
The problem is that BMW wanted to get the same amount of credits as a pure-BEV. California anticipated that a car with 300 miles of gas range might spend much of it's life being driven on gas if there was no penalty for doing so... and in fact that is exactly what happened with many European plug-in hybrids sold as company cars.
California never gave BMW the credits, but BMW decided to keep the dinky gas tank anyway, so that's on them.
The counter force to that is that lease car drivers have to meet certain fuel efficiency goals, so, adopt an efficient driving style and plug in the plug-in hybrid instead of ragging it around; I'm not sure what the consequences were though, probably more taxes. Either way, enough of a push for my colleagues with plug-in / hybrids to do the thing.
I think the goofy styling was probably as much of an issue as the tank size.
This was clearly a wonderful idea but it was hamstrung by a silly California rule requiring the gas range to be less than the electric range to qualify for rebates. With a 6 gallon tank, the car would have been able to do ~300 miles instead of 170 and would have been parked in everyone’s driveway.
An added benefit was that the car could use existing gas station infrastructure when you needed to travel long distances.