At first glance the decision by McLaren to defect to Mercedes power units from 2021 seems to be a slap in the face for Renault F1 Team.
Factor in that Renault is not on the receiving end of any of Formula 1’s bonuses (even tail-ender Williams receives a ‘modest’ $10 million annual sweetener) after re-acquiring its former Enstone-based team, and one is tempted to ask team principal and CEO Cyril Abiteboul how many more blows the French-controlled team can endure.
Yet, when we sit down outside the team’s hospitality late on Sochi Sunday morning – the day after news of McLaren’s decision broke – the Frenchman’s mood is far sunnier than the overcast skies hanging over the Black Sea resort.
Is he sorry to lose the only power unit customer his team has got when rivals Ferrari and Mercedes have two each, and the latter will reach three in 2021? I expect his answer to be a qualified ‘yes’ but it turns out to be exactly the opposite. How so?
“Because if the customer is not bringing anything to the party,” he says deliberately, “why bother?”
“What I’m sorry [about],” he continues by way of explanation, “is that we were not able to bring the relationship to a different level. We tried, because for me the single biggest threat for both McLaren and Renault preventing us really to reach the top teams is not [the concept] of a customer team, but [of] a junior team and a B-team arrangement.
He goes on to stress that he “did not want McLaren to become our junior team”, and laments the co-operative opportunities that both will in future miss out on, particularly with the looming prescriptions of the 2021 regulations and budget cap.
He adds that some form of co-operation was discussed when the engine deal was first cut (in 2017), but that was, of course, under a McLaren team then managed by Eric Boullier, who had previously directed the Enstone team in its Lotus guise. However, new McLaren F1 boss Andreas Seidl clearly has different ideas, and is not afraid to take tough decisions.
I point out that there is no other potential customer on the current grid. “No,” Cyril says flatly in agreement, then suggest that under such circumstances Renault needs to hope that at least one of the various new teams currently being mooted comes to fruition, then hook up accordingly.
“You know, we’ve had 10 approaches,” he discloses, “10 people are onto us, talking about forming new teams. But it’s not in our hands to decide. I do believe that, not just for us, Formula 1 will be healthier and stronger with more teams.”
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He pauses, then adds a qualifier: “We don’t need just more teams, [it’s] not just the question of quantity, it’s also the quality of the project, the sustainability of the project.
Abiteboul is well-placed to comment on the difficulties faced by F1’s smaller teams. He is the former (hired) team boss of now-defunct Caterham, having been recruited from Renault after the team briefly withdrew from F1.
“I’m obviously well-positioned to talk about these things. If you set up in Formula 1 you need to make sure the project is sustainable, not just for a one-year or a two-year plan…”
What, though, if Renault proves unable to attract a satellite or partner team: Would it still be economically viable for Renault to remain in F1 given that it would be unable to spread some of its cost bases, particularly on the power unit side?
He provides a surprising answer, which then proves logical as the full facts are revealed: “[Engine supply] is completely neutral, because under FIA regulations you have to sell at the cost of the parts; you don’t depreciate the structure, or you don’t depreciate your R&D costs.
“We buy all the [engine] parts outside, we have absolutely no manufacturing capacity. We subcontract, we receive the parts, we control the parts, we build the engine, but we don’t produce the parts. Unlike [the Mercedes operation in] Brixworth.”
He draws a comparison between the Renault and Mercedes engine manufacturing models, saying, “If you go into Brixworth, you’ll see plenty of machines, turning machines, milling machines and so on, so they produce their parts, lots of their parts, whereas we have to buy everything from outside.”
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Unsaid is that Mercedes needs a broad customer base to feed its engine operation, whereas Renault’s engine operation in Viry-Châtillon, a southern Parisian suburb, carries a slimmer overhead on account of its out-sourcing strategy. Ironically, the operation could be equated to the Haas-type model applied to engine manufacturing.
Abiteboul believes that from 2021 engine costs are likely to increase due to real world inflation and development costs, yet, “The FIA not willing to move from their €12 million mark on the baseline engine, [so] we would actually end up subsidising McLaren. Explain to me why I’m going to subsidise my most direct competitor, my most direct threat?”
What, though, about the advantages of increased grid presence or the political advantages of shared engine supply?
“Actually, [there could be a perception] that Renault is a bunch of losers because they’re beaten by their customer. So again, from a communication and marketing perspective there is really little in it for us,” he says in response to the first part of the question, “conceding, though, that there could be some advantages from a “footprint perspective”.
Then a pause before another wry smile. “I have never seen Red Bull voting for something because that was something important for Renault, and never would I expect that from Andreas [Seidl],” he says before going on to suggest that Renault has possibly been slightly naïve in not leveraging engine supply to its own advantage.
Cyril has previously referenced the Haas concept of sourcing all permissible technologies and expertise from Ferrari and outsourcing/sub-contracting the balance as a ‘fantastic model’. I question whether such an arrangement is his ideal for aligning with a customer team.
“In my opinion it’s a team that needs to be able to bring something, where we can create synergies,” he explains. “I think it needs to be an established team with some experience. We have little time, so it’s better to have a team that is already in action, that already exists, that has some footprint, knows the sport and, again, [is] a sustainable project.”
That’s a long shot given that all existing teams are spoken for. But he is clearly thinking longer-term, in turn implying Renault’s continued presence in F1 despite some veritable headwinds: “If possible, [there should also be] a marketing [element] because there is nothing better than a marketing project in order to have a sustainable project in Formula 1.
“We need time, we need to unleash the potential of such an arrangement. It’s not going to happen in year one or year two; you know, it’s a long-standing arrangement.
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“So, sustainability of the project: I think the sort of Alfa/Ferrari is a good example because they are sharing a marketing project. There is a mix of marketing, there is a mix of technologies, there is a driver element into this, there is an engine element into this. So, all of that is a very good example.”
Would, though, a stopgap deal with a new satellite team tick some of the boxes in the interim, I wonder?
“I don’t know,” he says. “It’s very difficult to tell you out of the blue, but I don’t know if there is a company in China, for instance, you know China is an important market for Renault. We have a Chinese driver that is doing very well in his first year in F2.”
This is Guanyu Zhou, formerly a member of the Ferrari Driver Academy, who has blossomed since he joined Renault’s programme this year. He lies seventh in the F2 standings and first among the rookie contingent.
“That can be an interesting starting point,” Abiteboul continues. “But that’s pure theory at this point in time.”
I point out that Panthera, the potential new F1 team revealed by RaceFans in August, allegedly has some Asian funding, but Abiteboul will not be drawn on the topic save for admitting that there has been some contact.
“We’ve met different groups of investors behind this project, and I think it’s moving; it’s clearly coming from the eastern part of the globe. But I think it’s up to them to disclose anything more in relation to their funding.”
The son of two engineers and a graduate engineer in his own right who interned with Renault, Abiteboul has long expressed concerns about the ecological impact of F1 and road car relevance, and has recently become more vociferous about the need for F1 to adapt to a rapidly changing environment, calling for, for example, synthetic fuels and alternate technologies to be introduced sooner rather than later.
“I’m urging everyone to fast-track the consideration for a new power unit [currently slated for 2025], what it should be, what it should look like, what it should cost, and start [to] stop spending crazy amounts of money,” he says.
“The reality is that we’re spending crazy amounts, all four engine manufacturers, and [we need to] start spending on what will be relevant for the future.”
He believes “electrification will not go away” and foresees a slowdown on investments on traditional internal combustion engines by motor manufacturers, which will in turn change the face of F1.
“Maybe [F1 should] also consider new sources of energy, like fuel cell or things like that, which probably will be the future for Formula 1. I don’t want to give a particular date, but look at how fast the world has changed in the last two to three years…”
Renault re-acquired its Enstone base in 2016, having disinvested in 2009 after being hit by the double whammy of ‘Crashgate’ and the global economic crisis. Subsequently the facility has been ramped up, with headcount growing from the sub-400 level during the final Lotus days to the current 700-plus.
According to Companies House filings the team’s overall budget – excluding the French engine facility – is in the region of $180m. But that includes components which will be excluded under the budget cap. How does Abiteboul foresee the looming budget cap affecting the operation?
“We are way below the budget cap. The situation right now, when we set up at Enstone we were assuming a budget cap, first and foremost. And that’s happening, that’s a good thing.
“But we were assuming a budget cap in the region of $150 million. So now we have a budget cap, good, but it’s higher than planned, $175m, and with more exclusions [these include driver costs, executive salaries and marketing/hospitality] than initially planned. So that’s mixed news.
“Put drivers in, marketing, depreciation, building facilities, put all of that in that [will be] excluded. So it’s quite a lot of exclusions, so actually when people talk about 175 [$m], if you add up everything you can easily go to 250.
“I think it’s good to have a budget cap, to start somewhere. I understand that we needed the first step and some form of compromise. Now that we know what to plan for, we need to define if we have the necessity to go up, so basically to spend more, to work with more people than we have currently.”
Although he estimates the exclusions in the case of Renault – which runs less lavish marketing and hospitality set-ups than, say, Mercedes or Red Bull, to amount to $40m – Cyril makes clear that the increased budget cap level is cause for concern at Renault headquarters in Paris.
“I see some things that we need to discuss with our parent company and also based on the sponsorship acquisitions that we are capable of doing in the next two years,” he says.
Nonetheless he has said much which will allay any fears Renault could be on the brink of exiting F1 in the wake of losing its only engine customer, and also due to the effects of an increased budget cap, let alone its political isolation
True, in an ideal F1 world Renault would have a B-team or even a satellite operation with which to share engine supply, technologies, development costs and political ideals, but, as Abiteboul admits, such prospects lie outside of Renault’s sphere of control.
Thus, for now Renault F1 Team has no choice but to hang in and hope that an incoming team materialises sooner rather than later. The question, though, is: What if that turns out to not be the case?
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