How F1 politics is scuppering its efforts to court a new engine manufacturer

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The biggest decision faced by Formula 1 this year is arguably its next power unit format. For of all the regulations – technical, sporting, financial and engine – it is the only one that leaves the sport at the mercy of outside suppliers who could leave F1 on a whim without as much a backward glance. As Honda will do at the end of this year.

The sporting regulations are within the gift of the FIA (working in conjunction with commercial rights holder Liberty Media), while the budget cap is a fait accompli, and can only get tighter. The chassis regulations are a joint project between all teams, governing body and CRH – plus teams have little choice other than to accept them or sell or shutter their businesses. After all, where else would they be paid to race?

However, due to their complexity and eye-watering costs Formula 1’s hybrid engines are now the sole preserve of manufacturer-backed operations – with the current suppliers being Mercedes, Ferrari, Renault and Honda. The last nascent independent engine operation – PURE, founded by Craig Pollock in 2011 in anticipation of the 2014-2021 formula – collapsed after a year due to a lack of investment. That is telling.

Power unit suppliers effectively have the worst of all worlds: they are obliged to supply teams at prescribed prices that don’t even begin to amortise their costs; are required to supply independents with equal specification engines, thus running the risk of their ‘works’ outfit being shaded by a customer team; and, last but not least, engines are seldom lauded in victory, but regularly blamed – directly or implied – in defeat. Who needs that?

Honda will quit F1 at the end of the year
There is no world championship for engines. Who besides hardcore fans recall that Brawn walked both 2009 titles with Mercedes or that Red Bull swept the next four years powered by Renault? Power unit suppliers don’t share in F1’s spoils – they do, though, receive a token $10 million per year – nor do they attract commercial sponsors. They don’t have seats on the F1 Commission (as in the past), having only consultative committee status and minority votes on power unit regulation changes.

Indeed, given its treatment of power unit suppliers over the years it is surprising that F1 has any engine brands at all – but little wonder that from next season all power unit suppliers will be directly linked to teams after Red Bull recently struck a deal to run rebadged Honda units, then subsequently announced plans for a full in-house power unit division to be known as Red Bull Powertrains.

Where Mercedes was once exclusively a power unit supplier (to McLaren) it soon realised it needed to own a team to control its destiny and purchased Brawn. Renault yo-yoed about as team owner and engine supplier – variously operating out of Paris and Enstone in the UK – before eventually returning in 2016 as full team owner, rebranding the operation as Alpine from this year.

The engine situation marks a far cry from the past, when F1 drew upon such as Coventry Climax, Repco, Cosworth (often badged as Ford), Weslake, Matra and Ilmor (Mercedes) with even McLaren’s Porsche-built TAG units being independently funded. Note: this list includes only the grand prix winners amongst them, with the likes of Hart, Judd, Mecachrome, Motori Moderni, Mugen and Zakspeed deserving honourable mentions.

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The fact is, though, that F1 simply cannot race without engines, and thus attracting additional power unit suppliers is absolutely crucial to the future stability of the sport. Where previous Concorde Agreements locked teams in for the full duration, under the current covenant they may walk away with less than a year’s notice – by 31 March for the end of any given year.

Stefano Domenicali, Lamborghini, 2018
F1 CEO Domenicali ran VW’s Lamborghini brand
Imagine the situation F1 would find itself in should Mercedes and Renault decide to exit at such short notice – much as Honda, Toyota and BMW abruptly did shortly before the 1998-2009 agreement expired, taking their engine supplies with them – which would leave only Ferrari and pseudo-Honda units to service ten teams. Thus, Mercedes and Renault know they have vice-like grip over the sport.

As outlined previously, F1 embarked on a charm offensive to attract at least one supplier. This was aimed at VW Group brands Audi and Porsche, thought of as ‘soft’ targets given F1 CEO Stefano Domenicali previously headed an F1 feasibility project for Audi before taking the reins of Lamborghini; Renault CEO Luca de Meo is ex-Seat, McLaren’s Andreas Seidl ran Porsche’s LMP1 programme and Williams CEO Jost Capito headed VW Motorsport.

F1’s challenge is, though, to add to add a supplier (or two) without alienating the existing base – and hence a series of summits for C-level executives to ascertain what terms and conditions would be attractive to, say Audi, without chasing Mercedes from F1. No easy task, and the closer they get to nailing down details so the further apart they all appear to be.

According to sources that much became apparent during the latest such meeting – held on Sunday in the Monza paddock – where the bickering started in earnest.

In attendance, in person or via video, were: The FIA’s Jean Todt, secretary-general for sport Peter Bayer and technical delegate Nicolas Tombazis; F1’s Domenicali and Ross Brawn; Ferrari chairman John Elkann and chief technical officer Michael Leiters; Mercedes top man Ola Källenius and board member for technology Markus Schäfer; de Meo and former F1 engineer and current head of powertrain and electric vehicles; Philippe Brunet representing Renault; and Christian Horner and Helmut Marko (Red Bull).

Notable absentees, though, were Toto Wolff – who is not a director of Mercedes High Performance Powertrains – and Ferrari’s team principal Mattia Binotto, a former F1 engine guru. Also not invited were team principals of teams without engine operations of their own: McLaren, AlphaTauri, Aston Martin, Williams, Sauber and Haas.

The first sticking point, albeit overcome, was the question of retaining the MGU-H, which caused major issues for Honda when the company returned in 2015, and proved horrendously complex and expensive. Mercedes, a proponent of this tech, offered to sell standard units to all and sundry, something both VW brands were obviously set against for various reasons, not least Teutonic pride. Thus, it will be dropped.

Then, the three incumbent suppliers wrote a letter to the FIA/F1 calling on them to levy a substantial commitment fee (said to be $50m minimum), to be forfeit and split amongst the trio should a newcomer renege after committing to enter as a power unit supplier. This raised the question of Red Bull’s status given it is not currently a power unit supplier but will be when the new formula arrives – with timing being another sticking point.

As an aside: F1 lawyers were allegedly concerned that the ‘commitment fee’ could breach EU cartel laws, and if so, where does that leave the $200m payment required from prospective entrants, also designed to be split amongst a?

At the time of striking its March 2021 deal to acquire Honda’s engine technology from 2022, Red Bull requested an engine-freeze, arguing it would be unable to develop power units at such short notice. This was eventually agreed to, although Ferrari insisted that the incoming engine formula be brought forward a year to 2025 – at the time this seemed an insignificant concession and was therefore adopted without much ado.

Crucially, though, this pushed the power unit regulations are out of sync with the 2021-2025 Concorde Agreement, which stipulates the governance process for any regulation changes during the currency of the agreement. Thus, any change of power unit format for 2025 falls within the current agreement, enabling teams to have input into the regulations; after that the sports masters could impose whatever they see fit.

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All well and good, except that given their lack of experience in designing and producing in-house F1 engines VW Group and Red Bull both requested a 2026 introduction to permit as long a development window as possible. See the conflict?

Todt is eager for a decision before his final term ends
A 12-month extension to the Concorde Agreement was proposed by those present, but this overlooks that the covenant has 12 signatories – FIA and F1 plus ten teams – not merely three or four teams who happen to be engine suppliers.

Asked whether he would countenance an extension, an independent team boss said, “It depends on what’s in it for us…” A logical answer given the independents are targeting lower costs and increased revenues in future.

Reduce the development window and VW’s brands may walk; extend it a year and the teams have no direct say in future engine regulations, with the independents holding the balance of power and inclined to exert it. In addition, under an extended Concorde the $200m ‘anti-dilution’ fee remains payable but could fall away under a future Concorde. Thus F1 would need to waive if the agreement is prolonged, or VW Group would need to pay $200m for a single season. Either way it’s a mess, and possibly even an illegal one.

Not for the first time has F1 discovered that its actions can bring unintended consequences.

The lack of experience with F1 powertrains also manifested itself in discussions over budget caps for engines: Levels of $120m-$160m were discussed – to put these numbers in perspective consider that in 2019 the Mercedes HPP engine operation spent about $200m of its $270m turnover on F1 engines, but that the team’s F1 budget is capped at $145m for this year – but VW Group pushed for concessions on the basis that they need to ramp up.

The same arguments were forwarded about dynamometer runs and other such activities: Mercedes, which has the most efficient engine cost base of all on account of its in-house work, pushed for the lowest caps and allowances while the rest went incrementally higher given their greater reliance on out-sourcing and/or inexperience. “It’s unlikely the twain shall meet,” one of the participants told RaceFans afterwards.

On the technical front it was proposed that the ‘bottom end’ – effectively the crankcase – be prescribed and that cylinder heads and valve train be free within the regulations, with some form of (yet to be defined) synthetic or e-fuel providing propulsion. All this was broadly outlined previously, with the target being 800-1,000bhp, split 50/50 between internal combustion engine and hybrid power.

Kinetic energy recovery systems – whether operating on rear or all four hubs is yet be decided – would be open provide the enhanced levels of electrification, although energy stores would, be prescribed to prevent what a source termed an “arms race on batteries”, and more is the pity for this is an area where the greatest performance advances could potentially be made. Hence restrictions on development.

Analysis: Audi, BMW, Mercedes – Why are so many manufacturers quitting Formula E?
But F1 should heed the example of Formula E: BMW, Audi and Mercedes all gave notice of exit from the all-electric series, the implication being that standardisation of performance-differentiating components made it technologically unattractive. F1 may discover that by ‘dumbing down’ batteries and other technologies it kills the relevance of the sport.

F1’s customary navel-gazing fashion leads it to believe that the sport needs only to make the power unit formula sufficiently attractive for VW Group to enter, whether via one or both its brands. This is just one part of broader equation: they need to evaluate whether to commit solely as a power unit supplier – and to whom – or whether to enter as team owner(s), and thus whether to acquire an existing outfit or start a team from scratch.

That is far tougher set of decisions to take than to simply drop the MGU-H, which the incumbent power unit suppliers view as a major concession, and therein lies F1’s conundrum: does F1 need VW Group more than VW Group needs F1?

After the latest meeting, held on grand prix Sunday in Monza, the FIA and F1 said in a joint statement, “Today a meeting took place involving the FIA, Formula 1, and existing and prospective power unit suppliers on the potential new power unit.

“The discussion was positive, and progress was made. Some details remain to be addressed, however, we expect these to be resolved in the coming weeks.”

The biggest problem is that time is fast running out: Todt’s third and final mandate as FIA president ends on December 17, and he is determined to tie up all loose ends before he departs office. Such time pressures could, though, force VW Group to take a hasty decision – and as history attests, manufacturers find it a lot easier to say ‘Nein’ to F1 than ‘Ja’.

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Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

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  • 37 comments on “How F1 politics is scuppering its efforts to court a new engine manufacturer”

    1. Enjoyed reading that article. It really highlights what a precarious position F1 is in and what a mess it all is.

      It’s a real shame the ‘pinnacle’ of motorsport is literally having to beg a manufacturer to join. Companies should be clambering to be involved.
      Mercedes, BMW, JLR, Toyota, Honda, Nissan, VW, PSA, Ford, Fiat – all should be wanting to showcase and advertise. Very sad.

      1. They only want to “showcase and advertise” if that advertisement is going to be positive. Look at RB/Renault and McLaren/Honda: Those relationships did nothing to enhance the reputation of either brand, mainly due to the perceived weakness of the engines they supplied (whether that perception was justified or not is immaterial). If Porsche or Audi enter but do not produce a winning engine, the entire investment will have minimal positive marketing impact. Being involved in the pinnacle of motorsport means very little unless they are near the front, winning races and/or demonstrating a high level of performance.

        1. I agree. But only to an extent. If the costs are not too great, and the technology not too road irrelevant, manufacturers are happy to compete with each other and not always produce a winning engine. I find it remarkable how DTM are able to retain so many manufacturers year on year. Since 2000, they have had at least two of the big three German manufacturers competing against each other every year, and at times all three. This year, they have the following manufacturer representation: Mercedes, Audi, BMW, Ferrari, Lambo, McLaren and Porsche. F1 would no doubt kill for that list. And as I understand it, these manufacturers all flocked to DTM this year, not as works teams though, because of the changes made by DTM after Audi said they were going to pull out leaving only BMW. Maybe F1 should learn from this.

          1. @oakfarmer depends what you really mean by “flocked to DTM”. As you note, none of the manufacturers have any involvement as a works entry – when DTM became yet another generic GT3 series, all those manufacturers have done is sold a car to one of those privateer teams.

            There wasn’t any particular desire on their part to actively seek out DTM – why would they care when you have another ten different GT3 series you could enter? Audi and BMW might have sold cars to privateers, but they’ve actively reduced their involvement following the switch to a GT3 based formula.

    2. There was a time f1 was the pinnacle of car development.
      Now even developing the battery is not allowed anymore?
      Exactly the terrain where most gains are to be found and very road relevant.

      1. Its a shame that this is happening and all the wrangling that is going on. I agree about the batteries development (or lack of). They’re doing it for bio fuel, look how many fuel companies in F1 are competing to come up with a faster, more powerful fuel? This will mostly likely produce some breakthroughs in fuel and tech learned that will trickle down.

        Trying to develop & compete for a higher performing battery would totally be up F1’s alley and could be very beneficial. Look at todays news about Honda introducing their improvement battery pack at Spa. Also, Williams Eng. developed and supplies FE all their batteries.

      2. I agree. For F1 to be appealing to those who hold the purse strings it needs a raison d’etre.

        The current ICE are incredible, but the available performance gains there are limited, and horrendously expensive. Whilst not preventing further development in that area, the two obvious areas for performance gain are:
        1. Synthetic fuels (because F1 is committed to ICE both for historic reasons and because FE has exclusive rights)
        2. Batteries

        From a engine manufacturer perspective, how much of the development costs in relation to those areas can be amortised to other partners. Surely synthetic fuels provides an opportunity for Shell, Petronas etc to improve their tech for their primary business and provide a good news story (greenwashing?) at the same time. Any development costs can be shared between the two.

        Batteries we already know are produced by Panasonic, LG and others, but with every man, woman, dog, cat, university and manufacturer researching and seeking improvements, clearly there is a direct line to a massive marketing advantage for F1 being the proving ground for battery improvements, as slowly but surely the amount of battery used in F1 increases whilst the ICE decreases.

        Does it run the risk of a tyre war scenario with both those? Maybe. But if costs can be shared and a positive narrative developed, maybe that’s the way of the future?

    3. Unfortunately the more ‘professional’ Motor Racing has become the more reliant it has became on the financial backing and advertising support of the major manufacturers, who see it as part of their advertising and PR departments. The people who run the various championships are coerced, bought, bullied into shaping the regs to suit the needs of the big players. Who can afford to come and go as they please, or move from one type of racing to another. Just look at Bathurst in started out as a series production race with 10 or more separate manufacturers competing in different classes. Now it’s just a mess.
      F1 has gone down a similar route the smaller teams have been forced out due to costs and constant rule changes and pandering to a couple of the big teams. Berni was never going to risk upsetting the apple cart and I can’t see Liberty doing it either, as their main objective as was Berni’s is to make money not preserve the heritage or long tern future of F1.
      I would not be surprised to see a ‘compromise’ reached meaning kicking the tin down the road, liberty taking a profit and leaving the mess for someone else to work out.
      And of course there is still the question of Merc and Renault being around after 2025/26.

    4. In addition, under an extended Concorde the $200m ‘anti-dilution’ fee remains payable but could fall away under a future Concorde. Thus F1 would need to waive if the agreement is prolonged, or VW Group would need to pay $200m for a single season. Either way it’s a mess, and possibly even an illegal one.

      This doesn’t make sense; earlier in the article you state that current engine suppliers wanted a $50 million ‘entry fee’ forfeit on exit. I believe the $200 million fee applies to new teams entering the sport, not engine manufacturers. Hopefully everyone will get their acts together, as we need multiple and committed engine suppliers.

      Reply moderated
      1. It ties into the question of whether they’d enter only as an engine manufacturer (which the article had previously as being a poor reward on investment) or as a team+engine combination.

    5. I would love to see the FIA take control of the regulations rather than all this debate with current engine manufacturers etc.

      If only they would have the balls to set out their vision for F1 and come up with a set of regulations that they support. Then it is up to interested partners to join, but those partners should never have a say in the actual setting of the regulations.

      I know, it is naïve thinking but man it would make things simpler.

      Reply moderated
    6. A problem easily solved by taking the competitors out of the decision making process.
      If the big ones leave, it’ll just make F1 more attractive and enticing to others.

        1. Lol?
          Ah, I remember now. Whatever Liberty and the competitors decide will be perfect, right?

          1. S I’d take anything Liberty and the teams decide together, over your dictatorial approach that would not only end F1 but ensure no interest from this mysterious set of teams you have in your mind that are sitting in the wings awaiting entry into a dictatorial series that has them with no say.

            But hey, easy peasy! According to someone in his armchair.

            1. You mean someone without a finger in the pie, @robbie?

              I think you overestimate the negative effects of having an impartial decision making system in place, and completely ignore the positives.
              Sure, nobody specific would gain from it, but equally nobody specific would lose from it either. Perhaps all would gain from it equally, as there would be far less compromise ruining the final product on the track.
              It’s the exact same reason that no team has a member in the stewards room.
              For many decisions, it is absolutely beneficial – vital, even – to look at something from the outside in rather than from the inside out. The view is much clearer.

            2. Oh and BTW, wasn’t it a dictatorial approach that grew F1 to what it became?
              F1 wasn’t much prior to Bernie grabbing hold of it, was it…. Just a pile of potential.
              He looked at what he thought F1 needed to grow, and he took it there. No democracy needed or wanted.

      1. S Yes that would be ideal but painful, if they did it would fall to them to make F1 attractive enough to draw the smaller manufacturers meaning an even tighter budget.
        If that were to be successful you could bet that the big players would be knocking on the door to get back in.
        The challenge would be to stay in control and not fall under their influence or succumb to bullying and threats of leaving.

        1. @johnrkh there is also the risk that such draconian measures instead alienate everybody, including the parties you are trying to draw in to begin with – is there any indication that such behaviour would be accepted by them?

          1. anon
            Look back at 60’s and early 70’s, and the ability for the small teams to compete with the likes of Ferrari. It was down to the fact that Ferrari did not dictate the regs. They were mandated by the governing body which allowed the Coopers, Brabhams, McLarens and Chapmans to design and build championship winning cars.
            I think there were 10 different manufacturer champions between 1960 and 1980. From the 80’s on it started to go into decline as far as diversity goes.

            Fast forward to 2000’s there is a situation where Merc, Renault, Ferrari and indeed Honda have considerable input into the regs. Now Honda has called it quits Red Bull are looking to take their place, apparently teaming up with VW…maybe. And they are looking at dictating the engine regs.

            The big car manufacturers are in Motor Sport for one reason, and that’s to promote their products. Now that in it’s self is not a bad thing, as they bring in supporters and sponsors. But when they can and do dictate the terms of their participation which includes limits who can compete, that’s it the sport is in decline.
            There is no shortage of great engineers able to design a great car, it’s the artificial limits being put in place by the big manufacturers and organisations such as Ecclestones Formula One Group and now Liberty seemingly bowing down to them, that are the problem.

            So until the situation changes where once again ‘small’ companies lead by motivated entrepreneurial engineers and designers can enter F1/ Motor Racing on equal footing. We will continue to see one make one driver dominance.

            Before anyone mentions the new rules for 2022 and how they will make closer racing. I posted a list of team and driver champions from Indy car a few months ago. Since 2000 it has been dominated by one team with 9 championship wins since 2003. That would be Chip Ganassi Racing the others include Penske and Andretti Autosport with 9 championships between them, and that’s a full spec series.

    7. What is the solution.
      Allow chaos and let the best win.
      Every potetial new entrant comes with their own baggage.
      I shudder at Marko and Horner attending these meetings yet have no current engine production.

    8. It’s all quite a mess isn’t it. F1 has a major problem in that the engine technology it is using, and has always used, is essentially becoming obsolete. So it is scratching around trying to find a cost-effective replacement that is different from full electric. Then the problem is that the only possibly interested organisations who can afford to develop whatever new technology is required are the major motor manufacturers. Why though should they be interested in doing this if the technology does not have some relevance to their main business i.e. building and selling cars. and it does not generate a decent return.

      I don’t know the answer here. We don’t know what is going to happen with the new fuels being developed and how successful this will be, do we? Surely the aim must be engines that are simpler in design and cheaper. Can they keep the essence of what they have but have it work with new fuels? I guess they have to or see F1 slowly drift into obsolescence. What are other series doing i.e. Indy Car?

    9. Given that F1 is a constructors championship, I think there are two paths to deal with the next engines.
      1 – Everyone has to design and build their own engine. This will be expensive, so the engines need to be simplified to make it so that every team can do their own (just like they do now with suspension systems, etc).
      2 – There should be ONE engine that is spec, and everyone has to use it. Performance differentiation would have to come from the rest of the car.

      As the article points out clearly, the current path is a mess. I don’t see how it gets fixed if they continue following the same model.

      1. This would be the safest path. Everyone would get a Mercedes engine, except Ferrari. Assuming Mercedes would commit with the sport on the long-term.
        And that would comply with F1 history, like when the field was basically Ferrari vs Ford Cosworth in everyone else.

        Hardcore fan note: Mugen is a grand prix winner.

        1. DFV’s filled the grid because they were the best engine at the time and were available to everyone at a reasonable price – not because the series had made specific regulations so only they could be used.
          Bit of a difference…

    10. Mugen won Monaco 1996 & Spa 1998…

      Reply moderated
    11. Why do we need more engine makers? More than four! It’s just the usual mindless ‘more more more’ human power instinct. More power, bigger grids, more downforce… And then, you end up making it cheap, and not actually F1 any more.

    12. Talking about being a mess. Existing F1 teams have been willing to make large concessions to add new teams & manufacturers on the grid. In recent meetings VW had made a list of demands they want changed in F1 in order for them to come to F1. Like dropping MGU-H (50% efficiency PU) in 2026. F1 teams agreed to this.
      Then I hear now that VW and Red Bull are trying to join forces and collaborate. That would mean all the things F1 teams gave up to VW was in vain, F1 got cuckold by VW and without getting more teams or cars coming to the grid. Probably also means VW will get access to Honda’s PU IP. VW wins & F1 loses. That’s embarrassing.

      I hope I’m really wrong and we see an additional team and (2) more cars on the grid in 2026.

      Reply moderated
    13. FIA and Liberty just need to grab the sport by the neck and lay down some regs. It’s taking way too many conflicting parties into decision-making. Lay down some regulations that is good for the sport to watch and will make sure a base level of manufacturers compete, whether they currently compete or ones that will come.

    14. Excellent piece as usual Dieter!
      What a mess, that sounds more like kindergartens shenanigans than a billion dollar business meeting. Fascinating to see where it all will end eventually.

    15. Still, if all VW has to do is put a Porsche badge on a fully working Red Bull operation, it’s hard to pass up, especially with MGU-H gone, but then what about the Teutonic pride badging a Japanese engine?

      1. I do wonder though how much that engine needs tuning/redesign if there’s no MGU-H to be coupled with it @balue; pretty sure a lot of the design of the ICE is with that combination in mind!

        1. @bosyber For sure, but I would have thought they would still use the Honda engine as a base without having to reinvent the wheel designing their own engine from scratch.

    16. It’s such a shame.

      More manufacturers = more teams = more seats for young drivers.

      Great job F1.

      You can’t even do what the BTCC and IMSA/WEC does.

    17. Funny you should mention championship for engine manufacturers @DieterRencken. I always thought that they deserved it and am running an unofficial one on my web-site. There even were times when tyre championship would make some sort of sense, when Goodyear, Dunlop and Firestone were in F1 at the some time.

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