On one hand of this power unit argument, you could concede that Mercedes boss Toto Wolff has a point…on the surface of the argument. Sure, Red Bull and other customer teams probably weren’t keen to shoulder the R&D costs through expensive engine supply contracts of these new V6 turbo hybrids that Mercedes and Renault threatened to leave the sport over if they weren’t implemented back in 2014. I wouldn’t either if I was red Bull, Sauber, Haas F1, McLaren, Williams, Toro Rosso or Force India.
On the other side of the argument, if I were Renault, Mercedes or Honda (eventually), I wouldn’t want to spend the money I had to without any real path to becoming whole again on this massive technology innovation. If I am Mercedes and I am supplying half the field, then I’d like to regain my massive investment in the engine supply program and I can’t continue to supply everyone at a loss. That’s bad business sense. I get that too.
If Mercedes, Ferrari, Renault and Honda agreed that to reduce the cost of an engine supply contract to customer teams, they’d make more reliable engines so the regulations could be reduced to three engines for the entire 2018 season, then yes, Toto is right as Red Bull agreed to a reduced engine supply deal by taking fewer engines.
The fact is, in sales you can either reduce the price of a quality product to a very low margin or even take a loss on it or you can simply provide less of the good thing which costs less to the end user. In my recent past, we would submit a proposal for a large project and the customer would then demand all the same functionality of the complete system for a much lower price. That isn’t how it works, in order to get a lower price, you remove functionality and hardware to meet their budget. There isn’t enough margin in our proposals to take the kind of haircut the customer was demanding. A $1.5 million integrated AV system for $700K isn’t possible so you start removing functionality, I/O’s, hardware etc. Mercedes removed an entire engine from the cost of a supply deal.
Now, on the other side of this, I find myself in the Red Bull camp on this argument because regardless of what Christian Horner wanted in reduced engine supply contract pricing, Mercedes were the ones who championed their hybrid technology, demanded F1 adopt it or they would leave the sport and unlike Red Bull, Mercedes should be costing a portion of the R&D to the road car division as their entire goal was to move in a hybrid direction for road car relevancy. That’s not Horner’s cause and he wasn’t keen for the change in engines back in 2013 anyway. Sure, he was winning with a cheap V8 but so be it. It was cheaper than this monstrosity. Wolff said:
“If it’s barking mad, they shouldn’t have pushed for a lower supply price, and we shouldn’t have agreed to give that in order to achieve lower supply price,” said Wolff, when asked by Autosport about the ongoing controversy.
“We’re going to go down from four engines, which was bound in the regulations, to three engines. This is where we are – the regulations stood for four engines for next year – and we were perfectly fine for that.
“All manufacturers were pushed, let’s call it strongly encouraged, to optimise on the supply price – and this is what we did and this was the consequence. And everybody, as far as I remember who was on the table, was part of it.
“It’s a massive struggle for all of us, but it’s out of what we have discussed.”
For Mercedes to backhand Horner by gift wrapping this argument in such a way is heavy-handed and has the luxury of being a team boss with one of the world’s largest engine manufacturers behind him. No one asked Toto to just provide fewer engines, they asked for a much more affordable engine supply deal. Remember the old notion that these engines would reduce in price after a few years with stable regulations? Where did that go?
I understand Toto’s point and if I’m him, I’d make a similar argument but it is much easier made when you have the upper hand and keep in mind, this is the team that wouldn’t supply Red Bull for fear of getting beat by their own power.
The engine war is a very real thing and Mercedes, much to their credit, have built a fabulous engine no doubt. They know that Renault struggles with reliability and therefore, they are keen to keep things exactly as they are with fewer engines in 2018. This will impact Red Bull should they get their chassis right and be competitive. I have an idea…
If Toto is fine with the 3-engine rule, then supply Red Bull with Mercedes engines and let’s go race! Let’s just see how well the Merc can do with a Red Bull with an equal and reliable engine. In that case, Horner may be just fine with the 3-engine rule too.
Hat Tip: Autosport