Could Ferrari follow Audi, VW out of racing over EPA fines?

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VW ran afoul of the Environmental Protection Agency when they were fined billions for their software “defeat” system that altered the emissions on some of their cars. The lingering effect of this kind of impact to the balance sheet was the removal of Audi’s racing programs in WEC and VW’s WRC programs.

This week, the EPA has served a Notice of Violation (NOV) to Fiat Chrysler Automobile (FCA) concerning 104.000 Jeep and Ram vehicles it says are producing emission levels that are illegal and this could cost FCA and estimated $4.63 billion in fines.

The immediate concern is what impact the fines may have on Ferrari’s racing program. As part of the FCA portfolio, Ferrari spend hundreds of millions on their Formula 1 racing program. To be fair, a large portion of that expense is offset but prize money from Formula One Management (FOM) as well as a premium payment of $100m for their position as the longest standing team in F1 that expires in 2020.

Ferrari also have strong sponsorship deals with UPS, Philip Morris, Shell, and Santander as well as a revenue stream via the sale of hybrid power units to Haas F1 and Sauber. With a large portion of their expenses offset by these partnerships and payments, any EPA fines against FCA may not impact Ferrari in the same way it has VW/Audi.

Ferrari’s participation in F1 is crucial to the series as well as the new majority owners, Liberty Media, and it would be devastating should Ferrari be forced to remove itself from GT racing in WEC or F1 as they represent the two largest marketing programs for the Italian auto maker.

The EPA’s fines have cost many jobs in VW/Audi’s racing programs, marketing departments and third-party marketing contracts as well as impact on hospitality, travel, hoteliers, freight, transportation and eateries. The impact it will have on attendance at some of the WRC and WEC races has yet to be seen.

For Ferrari, the EPA’s NOV to FCA will be a crucial element to 2017 and beyond. Looming in 2020 is the end of their Historic Team contract and it remains to be seen if the new owners, Liberty Media, will be keen to sweeten the pot for Ferrari only. Sponsorship deals will also be ending and renewal will be critical. FCA CEO Sergio Marchionne has insinuated that he’d like to see Alfa Romeo back in racing too but if the EPA fines FCA billions, that could be a desire lost.

“We have done nothing, in our view, that is illegal,” CEO Sergio Marchionne said on a conference call. The characteristically blunt executive accused regulators of “grandstanding” and trying to “lynch companies” over differences of opinion.

The project fines of $44k per vehicle would place a serious burden on FCA and erase several years of profits as well as make it difficult o meet its debt obligations which are at €4.7 billion at the end of 2016.

Hat Tip: WSJ

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J. Doug Patterson
Editor

Ferrari won’t leave Formula 1, but they could leave a lot of other racing programs. The big problem for FCA is the C part of the name. Let’s take a look at some statistics:
No. of Constructors’ Titles won with Mercedes power when Mercedes owned Chrysler: ZERO
No. of Constructors’ Titles won with Mercedes power after Mercedes sold Chrysler: FOUR
No. of Constructors’ Titles won with Ferrari power when Mercedes owned Chrysler: EIGHT
No. of Constructors’ Titles won with Ferrari power when Ferrari/FIAT owned Chrysler: ZERO

There’s your problem. Your team has been infected with a bad case of Chrysler.

Tom Firth
Guest
Tom Firth

What other racing programmes?

The group doesn’t have any other significant factory racing programmes, a couple are rumoured, Alfa Romeo and a return to NASCAR by Dodge which may now not reach fruition but that’s all.

The Ferrari GT programmes are all customer clients, as is Maserati GT programmes, Fiat has a few Abarth series but they are grassroots and unlikely to even register. Chrysler, Dodge don’t have front line programmes. Alfa Romeo have non.

It isn’t going to impact Ferrari F1 I don’t think, just like how VW’s has not influenced Porsche’s racing programmes.

Godfather
Guest
Godfather

Are you being serious? Your comment just goes to show how much you know about the car industry.

The only part of FCA that is bank rolling Alfa, Chrysler, Maserati, Fiat is JEEP and RAM. Without both of them brand, FCA would be bankrupt.

ScottyNZ
Member
ScottyNZ

I hear you can get antibiotics for that…….

Janjua
Guest
Janjua

Yes, 100% True. Chrysler is a brand and company that is useless and should not have been bought by Fiat Group. Chrysler cars over the past 20 years have been low quality, poorly built, unreliable, not good to drive and in efficient apart from the 300C which was decent.

Rapierman
Member
Rapierman

Kinda makes me wonder if the EPA is going to be so bold as to serve a Notice of Violation to F1 and the FIA as a whole (not to mention other racing series that has any sort of operation in the US).

J. Doug Patterson
Editor

Don’t give them any ideas! I was nervous enough when it looked like they were going to prohibit the conversion of production cars for motorsport use.

Member

What would Ferrari’s responsibility be in this case since they were spun off? While its true that the owners and the CEO of Ferrari and FCA are one and the same, aren’t they separate entities now? Ferrari also has little or nothing to do with how Fiat Chrysler handles its diesel programs. On the other hand, if worse comes to worse, any funding and support Ferrari received from FCA would be done for, as well as any dreams of Alfa Romeo F1. I guess the other teams would see Ferrari’s drop in funding as an opportunity. It will be interesting… Read more »

Racing Clothesline
Guest

Technically, Ferrari and FCA are two separate companies that are just partly owned by the same parent company, so Ferrari shouldn’t be impacted by any FCA fines.

ScottyNZ
Member
ScottyNZ

On the Facebook feed there was a fairly strong rant by Jason Keffer which is disparaging about the current hybrids… I suggest you all go over and read it. What I would like to point out to him/her (can’t make assumptions) is that the current hybrids peak hp output matches the old n/a v8s. What Jason doesn’t grasp is that the peak hp output is governed by fuel flow rates. Jason was advocating that F1 moves to a “a no holds barred naturally aspirated 3.0 l (8-10 cylinder) or turbocharged 4 cylinder formula and let the engineers go for it.”… Read more »

Salvu Borg
Guest
Salvu Borg

The current hybrids (meaning the turbocharged 1.6l power unit) who’s last year combined ERS and ICE max power output in qualifying mode of 980 BHP at max power speed of 10500 RPM surpassed that of the previous NA 3.0L V10 which was producing 920 BHP at a max power speed of 18700 RPM. The ICE part of the same power unit alone which was producing 820 BHP in qualifying mode at a max power speed of 10500 RPM surpassed that of the NA 2.4L V8 which was producing 750 BHP at a max power speed of 17500 RPM. A NOTE:… Read more »

jakobusvdl
Guest
jakobusvdl

That’s really impressive, especially when the fuel flow rate is limited to 100l/hr. Were there any fuel flow rate limitations with the previous configurations, or just the total fuel mass per race?
Any idea how the torque outputs compare?

Salvu Borg
Guest
Salvu Borg

Neither the NA 3.0L V10 nor the NA 2.4L V8 had any fuel flow rate or fuel load restrictions. What has been achieved with the 1.6L TURBO POWER UNIT restricted to using 100kg/h fuel flow rate is a marvel of modern engineering. Re torque outputs, the 1.6L TURBO POWER UNIT produces a lot more torque than the previous NA V10 or NA V8. The NA 2.4l V8 back than running at 19k RPM was producing 750 BHP and outputs 274nm of torque that corresponded to 14.3 bar mean effective pressure (MEP). BUT that was less then the 15.1 bar maximum… Read more »

jakobusvdl
Guest
jakobusvdl

Time for a deep breath Salvu……I think you’ve misunderstood the purpose of my question. Yes, on a track (all other things being equal, or similar) power is critical on a circuit. But what I was wondering about is given the current 1.6 litre ICE’s are limited to 10,500 rpm, and the earlier 2.4 litre n.a ICE’s were pushing 20, 000 rpm, these current units must be chucking out twice the torque to make the same power. Torque at the wheels will depend on gearing, and I’d assume the area under the torque curve for the hybrid p.u’s would be massive… Read more »

Salvu Borg
Guest
Salvu Borg

Apart from my answer to your post, I left out a one comment I wanted to make re your “So more power more of the time (current power unit)”, Yes more power but CERTAINLY NOT FOR “MORE OF THE TIME”, that is because max power output is restricted by the mandated fuel flow rate to 60 minutes of the race duration, while the NA V10’S and V8’S had no flow restriction and neither fuel load restrictions.

jakobusvdl
Guest
jakobusvdl

When I said ‘more of the time’ I meant, through more of the rev range. But you’re quite right, the fuel flow and total mass restictions mean access to the potential power is constrained.
Without those contraints, these wee beauties could be putting out even more impressively tyre melting amounts of power.

Salvu Borg
Guest
Salvu Borg

Agree. that’s a lot better put.

Salvu Borg
Guest
Salvu Borg

I did not misunderstood your question, technically for sure not. But the purpose, it could be.
AS to what you said (technical) I fully agree with.
I declared it myself on here, that the present “PWER UNIT” and please all those reading us, I am saying “POWER UNIT” and not engine, batters not only the BHP output in qualifying mode, but also the “TORQUE) output of the previous 3.0L NA V10, As I also declared that the “ICE PART” OF THE PRESENT POWER UNIT alone in qualifying mode also betters the BHP and TORQUE outputs of the previous 2.4L NA V8.

jakobusvdl
Guest
jakobusvdl

Thanks Salvu, sounds like we’re both big fans of the current power units.
That’s a bit unusual in the F1B community, so it’s good to have company on the pro-hybrid technology side.

Salvu Borg
Guest
Salvu Borg

As an old school F1 follower and I mean a long time bus pass holder at that, I would prefer previous big NA engines, but as an engineer I could not hide or stop my marveling at the progress made with these new power units.

MIE
Editor

Not enough is done by F1 as a whole to promote the advances in the technology shown by these current hybrid power units. I’m sure if you were to write a short article on the development of these units it could be published on this blog.

Salvu Borg
Guest
Salvu Borg

I have returned to this page over 48 hours too late and can only hope that that you both read this. MIE and jakobusvdi, Thanks for the complement, But I do not think I qualify to do that, maybe if it was my mother’s language I would have. BUT, Just talking between us, that the advances in the technology shown/achieved by these current hybrid PU’S is a marvel there should be no doubt whatsoever. The problem of the progress made is “the numbers achieved”, when talking about the progress made the 2014 season does not count as the engines were… Read more »

jakobusvdl
Guest
jakobusvdl

Great suggestion MIE

ScottyNZ
Member
ScottyNZ

OK stand slightly corrected. The point I am really trying to make is that the current power units have got a lot of grunt and that the amount of grunt is currently limited by the max fuel flow rate. The current power units, at peak output, therefore out perform the 3.0L and 2.4L engines while being significantly more fuel effecient. If we want to go through the roof with hp figures then lets just change the rules to increase max fuel flow rates.

Salvu Borg
Guest
Salvu Borg

OK, Fully agree, fuel flow rate is the limit.

jakobusvdl
Guest
jakobusvdl

There’s an oppotunity in every situation.Maybe Ferrari can sign up the company who act as FCA’s legal advisor’s as a new sponsor. With US$4.6 BILLION! at risk, those guys are going to be making a fortune fighting the EPA for the foreseeable.

meine
Member
meine

Nice reason for letting Marchionne go.