What’s really going on with this F1 budget engine deal?

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The two-tier engine formula for F1 has many tongues wagging and even teams you’d think would be all over the concept are making noises about not being convinced the Balance of Performance (BoP) can be achieved or lacking details etc.

In the end, the teams may reach a compromise and simply decide to lower the cost of their current hybrid supply contracts to small teams making the sustainable F1 program more affordable for all teams while the manufacturers take it in the shorts in order to compete and run at the sharp end. Is that the right solution?

In my mind it still leaves a gapping hole in the software and version of the engines provided to the smaller teams and even though they can afford them, you still will have Mercedes running out front with tricked-out hybrid gear and Ferrari chasing them while small teams struggle along with the less tricked-out hybrid engines they got from Mercedes and Ferrari.

What would we have achieved in such a scenario? The fact is, Ferrari never wanted this hybrid engine in the first place and if the new Class B engine spec is regulated using the BoP and put on equal terms as the hybrid in performance, then what justification would you have for continuing to build the hybrid? I think that’s the point really. Formula One Management’s Bernie Ecclestone has never been a fan of the green engine concept and it’s nearly killed F1.

So in my mind, he has to be thinking this very issue. The come back would be that the reason manufacturers wanted to get into F1 with this format is for road relevancy and if Mercedes complains that Force India or Red Bull is competitive with them using a Class B engine, they would get a reply along the lines of…well, this is racing but you’re here to make road relevant engines for your road cars and develop them in the crucible of F1. That’s why you’d continue to make them…are you now saying that road relevancy isn’t important to you and that sustainability in your engine design isn’t something you’re focused on anymore? You get the picture, right?

In reality the new engine spec is a gambit for control of the sport and to dislodge Mercedes and Ferrari from their strong position over determining the future of F1 when their contracts end in 2020. The FIA controlled the V8 and V10 eras through regulatory oversight and there were many suppliers as well as manufacturers providing those engines. The new engines are so complex that the FIA have lost the ability to control the sport as there isn’t a line of people waiting to create engines that only a multi-billion dollar company like Mercedes can afford to make. What good is a manufacturer in the sport if it is leading everyone around by the nose as they are the only ones who can afford to make the very heart of the series…the engine?

Look at it! Mercedes is supplying half of the field and determining who gets an engine and who doesn’t. They won’t give an engine to Red Bull for fear of being beaten and neither will Ferrari. The FIA and FOM know the sport is hanging in the balance and you can’t marginalize Red Bull’s strong position as a privateer with huge bank accounts and no knife in the engine fight. The FIA and FOM can control a series like that and to be honest, I bet they’d gladly show Merc the door if they could have a team like Red Bull to replace them with a huge check book and need for an engine supply. Pretend that Apple or Oracle wanted to get a team in F1 for marketing and branding just like Red Bull. What a coup that would be. Huge influence, massive brands and they don’t make engines.

I think the manufacturers will make a compromise in the end but Mercedes won’t like it at all. Some will consider it a failure of the FIA and I would say yes, the hybrid engine was not a good idea the way the regulations were written and it’s done a lot of damage to the sport. I would rather them admit they went a bridge too far and got back to the business of racing and get out of the road relevance and sustainability industry. If you want to offer KERS, great. If you want to write regulations that demand more performance from a turbo of naturally aspirated engine, great. It all has to start somewhere and this is where it all begins…the Class B engine tender. Well, that’s what I’m calling at as “B” stand for budget.

There’s a reason Max Mosley was on TV recently with Mr. E and that wasn’t to glad hand. It was to foreshadow an upcoming aggressive move by Jean Todt and it was intended to position the manufacturers as the ogres and Jean Todt needing to make aggressive moves for the future of F1. It was to set a narrative and give him an out on moving away from sustainability hybrid engines.

This is my opinion but I think the engine tender is being used as a serious bargaining chip and at some point, if Ferrari think they can make a class B engine and win, they’ll do it. Mercedes might not.

You recall that when a team dominates, the rules change. Remember complaining about the Vettel/Red Bull domination? The Schumacher/Ferrari domination? Well, some folks have had enough of the Hamilton/Mercedes domination but this time, it could have serious implications for the sport in the long run and the FIA and FOM are moving to change that.

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Rob

If they had a fair distribution of money , smaller teams could afford the engines

Negative Camber

There is that too but that’s why I’ve said that the EU complaint might be a welcome thing for FOM too. :)

Rossco

That maybe true, but at the moment, you need a Mercedes (or Ferrari at times) power plant to win.
They are being tactical over who gets their engines, that’s an issue.

Derek Andrews

Your spot on Merc. has to much power and say on who gets what how can it be fair on the small teams when they don’t give them the latest P/U or the latest software.Red bull can not get a decent P/U because Merc. is worried in case they beat them i thought this is supposed to be racing. if Red bull pull there 2 teams out not because of money but because Merc. screwed them over the P/U how long will the smaller teams keep paying these stupid amounts of money with no chance of winning before they can… Read more »

The Sarcastic SOB

You mean Merc & Ferrari have too much say in who they lease their own engines to?
By that standard Red Bull should be forced to sell their chassis to anyone that want one. Think that’d work?

The Sarcastic SOB

btw in case you’ve forgotten, in the ‘old days’ we always knew a certain MS was going to win, so what’s new?

Negative Camber

That would help but I also come back to the thought of, how do they know they are getting the same exact software and engine as Merc is using? And, how much can the team modify their supplied engine? None with the engine freeze.

The Sarcastic SOB

I doubt that the customer teams can modify the engines at all. They don’t technically “buy” they lease them and it’s not their intellectual property so they can’t mess around with them, just like the way I can’t modify Windows. But they get a bunch of engine specialists in the deal to keep it together.

Negative Camber

That’s not the point at all. I like Merc and Toto just fine. Great team and awesome job for the last several years. Ferrari are very much a political part of F1 for sure. They carry a big stick in F1 and have since the beginning. Read any story about Mr. E’s meetings with Enzo or how Max and Bernie approached Ferrari. You’ll get the point really quick that your comment is spot on…very political beast in F1. The point is that this is a big move and Ferrari are more likely than Merc to switch to a Budget engine… Read more »

Patrick Chapman

As I’ve said before Todd, you are a very patient man. And I’m going to add broad minded to that. I don’t think that I have the character to walk around with a great big target painted on my back every day like you do. I take my hat off to you. Keep up the excellent journalism. I and I am sure many others who visit your site regularly appreciate and are grateful for the work that you do.

Negative Camber

Yeah, some folks seem to feel compelled to take shots at me. The only ones I find interesting are comments making big assumptions about who I am, what is motivating my comments and feeling they’ve exposed some big bias in my character. They’ve never met me and most often are grinding their own axe and bias while using me in the process. Whatever, most folks here know that I try to be as level as possible. Like when those who accuse me of being a hater of Lewis hear me praise him for something, that usually hurts their brains. :)

Paul KieferJr

Bernard, what would you say if you could only buy a product from one person? Wouldn’t that create a monopoly and give someone too much power over your life. Well, Formula 1 is getting close to that point. Don’t you think it’s time something happened to break up that monopoly?

bobmendon

Here’s a real thought. The “monopoly” exists because there is a market that ready and willing (although not always able) to spend their money. The problem is not the commodity (engines) but rather the market in the form of the FIA. Because F1 has failed to attract and keep car manufacturers in F1 or even having some interest in F1, we have teams showing up to race on a shoe string budget with no engine. So the market (teams) are not happy with how much they have to pay for those engines and now they are running to the EU,… Read more »

longshot

Thing is though, Ferrari _can’t_ make a class B engine. The FIA have called for tenders for a single supplier only – the other manufacturers don’t have the option of going down this path, and that’s why Ferrari will oppose it.

If, as is entirely possible, the Class B proves to be too competitive, why should the likes of Merc and Ferrari stay in the sport, possibly consigned to the midfield but having to spend a huge amount more on their engines with no option to switch specs?

Andreas Möller

Important point, this. If the 1.6L hybrids are no longer viable, I’d personally prefer the regulations themselves to be changed, so all manufacturers can produce engines under the new rules. A cap on the supply cost would obviously still need to be implemented, but other than that, let all of them build engines to the new spec.

Negative Camber

You’re right, a tender was offered and Ferrari haven’t applied for it. My thinking here is that IF they do approve of the class B engine and it performs well over time (say 2017 and 2018) then Ferrari may well appeal to the FIa to offer their own spec of Class B. I suspect that a bigger decision will be made long before that and it’s to play the hand of the hybrid and eventually phase it out leaving Ferrari and Merc able to make the class B spec. To me, this isn’t so much about an alternate engine so… Read more »

longshot

Assuming the B Spec idea goes ahead, and that’s a big “if” obviously, I’d be surprised if Ferrari didn’t transition to it at some point. Their road cars are V12s or V8s, no ERS at all, so unlike Mercedes the hybrids are totally irrelevant for them. It doesn’t worry me if the hybrids are removed or not. To my mind its better if they allow them, providing the B-spec is competitive due to whatever BoP measures they introduce. It’d make for more interesting racing, especially as the B-specs would require more fuel & hence be a little slower at the… Read more »

Matt Somerfield

Ferrari couldn’t apply for the ‘alternative engine’, just as Mercedes, Renault and Honda were excluded. The tender document specifically ruled it out.. “C. The candidate declares to be entirely independent of a major car manufacturer.” It’s all pretty much done and dusted now in any case and as we know it was more a public shaming of the manufacturers into reducing their costs to those poor teams who can’t survive… Boo hoo, F1 has always been a format dominated by money and how it’s best used (resources wise, that is the essence of competition is it not, the best win?… Read more »

Negative Camber

I’m with you on the cost front. F1 has always been expensive. I understand the concern over the new direct agreement with Ferrari, Merc, Red Bull, McLaren and Williams but in the end, it’s about control over the direction of the sport. This tender is a strong hand been played. Mr. E has never liked the new engines and this is a first shot of moving toward a new concept under the veneer of a cheap engine for small teams. More importantly, it’s an attempt to get the engine supply costs down to $12m.

Matt Somerfield

Totally agree Todd, the cost has escalated beyond the usual rate of inflation (as I mentioned in a recent article looking at it) but, with the dev money already spent are the manufacturers just supposed to support the rest as ‘sponsorship’? The problem is we will never truly know how much Merc has sunk into the PU106’s as there is so much crossover between the roadcar division, HPP and AMGF1.. As you say, this is just a play by BE to get what he wants, most of which is to do with noise as he stuggles to sell it to… Read more »

Negative Camber

There is a arching trajectory to the flow of money and I usually point out that it’s made multimillionaires out of many team bosses too. For me, the Mercedes/Ferrari power unit is now presenting a serious concern for new contract negotiations in 2020. It’s delivering serious discretionary power and unbalancing the pyramid and the FIA and FOM are making moves to correct it.

Patrick Chapman

And yet Mechachrome have announced that they will tender and they are a wholly owned subsidiary of Renault. So how did they get away with it?

Tom Firth

Mecachrome is not owned by Renault SAS.

Patrick Chapman

Sorry Tom my mistake. My old memory told me that in 2008 Renault had sunk 30 million Euro into Mecachrome to help refinance the company due to financial difficulties and in return they were to receive a controlling interest. Guess the deal didn’t go through. I will check my old information before I let it out again. Thanks for the correction

Tom Firth

You might not be entirely wrong in that Renault is somehow connected to either Ace Management’s Aerofund consortiums or through the French government’s indirect stakeholder somewhere, but I do not know for certain. The other party is Quebec.

Andreas Möller

Reports are now coming in that the budget/alternate engine plan has been rejected by the F1 commission. I wonder what’s next for this idea? The German paper “Sport Bild” (which broke the news) speculate whether Todt/BE will make some sort of force majeure argument at the Motor sport council, but I don’t see what the “extraordinary events outside their control” would be…

Paul KieferJr

The most likely “extraordinary events outside their control” just might be the EU courts deciding that they needed to make changes just to avoid being charged with creating barriers to entry (monopoly).

geeyore

“the reason manufacturers wanted to get into F1 with this format is for road relevancy” With all due deference: that’s what they say, but it really seems to be a big fat red herring. There is almost nothing road relevant about a racing vehicle that moves at 200+ MPH on a carbon fiber frame and suspension with quick-decay racing tires, 700 points of telemetry, fine-turned microscopic aero, and a single driver in the cockpit with no windshield. Anyway, Enzo Ferrari would probably have said that “road relevance” is 100 percent backwards. Manufacturers have for many decades succeeded with production cars… Read more »

Negative Camber

Having attended the auto show in Detroit, I will say that Merc was very hybrid forward in their booth. They made a lot out of their technology in F1 translating so I do believe it has helped. Some suggest, however, that the help came from Merc road to F1 and not the other way around. Regardless, F1’s biggest appeal is the rapid prototyping and proof of concept ability and that is road relevant.

Paul KieferJr

How much is that “hybrid forward”, “rapid prototyping” and “proof of concept” is it’ costing Merc, and how much of that gets folded into the price of one of their regular cars?

Patrick Chapman

Until the new F1 PU format there were no road cars with an MHU-H They only used the kinetic recovery system. So the advent of a turbocharger that can also charge batteries is very road relevant and will be incorporated into all turbocharged vehicles of the future.

The Sarcastic SOB

Exactly. My grandma’s Caddy is more technologically advanced than an F1 car except in the area of 200 mph aero and tricky engine mapping. But then she has a light foot so it doesn’t matter.

Alianora La Canta

The FIA told manufacturers it thought it had a road-relevant format and the manufacturers spent 18 months negotiating it out of its original extreme of V4 1.6-litre engines. This isn’t really a format the manufacturers wanted, but something demanded by the FIA that the manufacturers have had to adapt to as best they can. Mercedes, of course, can still use it because they are the most successful and success sells. But it never fitted any manufacturer’s plan (at least, not those actually in the series) on a design structure basis. Honda were persuaded in largely by McLaren’s negotiation skills (which… Read more »

Patrick Chapman

The manufacturers were at the forefront of pushing for this engine format on the grounds that is is road relevant. The FIA were dragged along for the ride citing the green aspect. Mercedes and Renault were largely the architects of the format that we have today and not the FIA as most people believe. This is the outcome of Todt’s philosophy of democratic rule making involving all the teams. That is the single biggest mistake that F1 has seen in it’s entire history and until such time as the FIA wrestle back some semblance of control, we will be stuck… Read more »

92gsr

The “no durability limits” of the B-spec engines was a dead giveaway that it wasn’t a real attempt. They will never return to new engines for Friday, Saturday, and again on Sunday. The real issue here is the power struggle between FIA, FOM, and the engine manufacturers.

Negative Camber

Indeed. Regardless of whether I like or don’t like the B-spec or hybrid, this is really the issue. Struggle for control.

Patrick Chapman

We are going to have to agree to disagree on this one Todd, at least until after February next year when “All will be revealed”

Negative Camber

Completely fine with me. It’s not important for me to win arguments or debates. time wins debates and perhaps February will prove me right, wrong or both of us could be scratching our heads. Which could be the reality. :)

The Captain

“if Ferrari think they can make a class B engine and win, they’ll do it. Mercedes might not.” Actually I don’t think that they would at this point. As much as they had to be dragged kicking and screaming to the new format the reality is they’re just as much invested now into the new crappy lumps as Merc is. Ferrari has sunk a ton of R&D into the new lump too. Perhaps not as much as Merc, but I’m sure they want a return on that investment. Add to that the fact Ferrari is the closest to Merc in… Read more »

Negative Camber

Very well could be the case. I tend to think they would move toward an engine they feel they can take the most advantage of and since most of their road cars are not hybrid, it could make more sense. Dunno but they have sunk a lot in this program.

ETM

While it is a valid point to say that an issue is that the smaller teams cannot afford these engines I do not think that view expresses the real problem. The issue is that the front running teams are incentivized to build these expensive engines because the payout for winning is so great. F1 payouts are so out of balance that the excessive cost to develop and build these engines is marginalized by the huge payback from winning. Bernie has built a self feeding machine, spend lots, get paid lots, spend more, get paid more. Smaller teams can’t afford the… Read more »

Patrick Chapman

Unnecessary post and completely wide of the mark.

The Sarcastic SOB

Ok, lets just get 1 thing straight: FIA did NOT put out a “tender.”
They sent out for “expressions” of interest. Obviously legal-weasel wording so they could wave the concept around as a threat and still not have any legal responsibilities that accompany a formal tender.
And given today’s news on that front that’s obviously what they’re doing.

The Sarcastic SOB

And I believe the teams are all called “manufacturers” in FIA parlance, plus I’ve never heard they have an official category for “engine suppliers”.
We should call them what they are: successful racing teams who design, build, and race their own IP who happen to have spent billions on their own engines, and just coincidentally lease them to a few other teams.
I seriously doubt there is any *requirement for them to supply competitors with *anything, nor do I believe you can *force anyone in any industry to sell *anyone their own Intellectual Property.

Bernard collins

Jeez Todd give it a rest, take a look at your last twenty articles , basically I hate toto ,Mercedes , hybrid engines , Ferrari are really the good guys despite being the biggest political animal in f1 .
, your stuck in a rut and your view is as skewed as any fanboy on an Internet forum ,