A new drama is brewing in F1 over a lower-cost alternative to expensive hybrid engines. But will it boil over into a crisis?
There is a fight for control of F1 playing out, with Bernie Ecclestone having at least partly enlisted FIA president Jean Todt’s support in reducing the hold the engine manufacturers have. The instrument with which they are doing this is the threat of an independently supplied engine of a different specification that could be legislated in to run alongside the existing 1.6-litre V6 hybrids on an equivalency formula basis from 2017. It would be significantly cheaper and regulated to be as competitive as it is needed to be.
This latest development in a long-running saga was triggered when Ferrari recently used its controversial power of veto over the proposal to put a ceiling on the prices the power unit manufacturers charge to customers. Ferrari, Mercedes and Renault charge between £13-17 million (€18-24 million) to Williams, Force India, Sauber, Red Bull, Manor and the like for a supply of the hybrid 1.6-litre V6s that were regulated in by the FIA from 2014. This compares to around £7 million (€10 million) for the preceding frozen-spec naturally aspirated V8s with kinetic energy recovery systems (KERS). The smaller teams, already hurting from the iniquitous pay-outs, have been hurting more in the hybrid era. Furthermore, the prospect of losing Red Bull from the category because it could not secure an engine partner was real enough to set alarm bells ringing with both Ecclestone and Todt. In fact, the Red Bull engine crisis and Ferrari playing its veto card have together cemented the commercial rights holder and the FIA president – not always the closest of allies – into alignment on suggesting this controversial ‘client engine’.
The motivations of each are slightly different – Todt simply wants the hybrids to be sold to the independents at a more affordable price for the sustainability of the sport, Ecclestone wants to curtail the political power of the manufacturers that comes with supplying horsepower to the whole grid – but Todt has signified the seriousness of his intent. On Friday November 13 the FIA website contained an official invitation for expressions of interest in tenders for the alternative F1 engine. This was before the F1 Commission had even voted on whether there should be an alternative engine – and the implicit message in that was that the FIA would be prepared to override the normal process of regulation change by imposing a solution based on its responsibility for the category’s sustainability. For the consensus-based Todt it was a very Mosley-style challenge. It certainly changed the previously complacent attitude of Ferrari and Mercedes about the idea.
The basis of the client engine has been proposed as an uprated version of the existing Indycar 2.2-litre, twin turbo V6 (though other formats have been suggested, including a normally aspirated V8). The idea is that the FIA would invite tenders from independent engine companies (such as Ilmor and Cosworth) to act as single supplier for a spec customer engine from 2017. But a lot of water must pass under the bridge before that becomes a reality.
Technically it would not be the work of a moment to upgrade the 700bhp Indycar engine to a 950bhp Mercedes-beater, but it could be done. “This was conceived as a tough, durable engine, one that can run for 2500 miles between rebuilds, running flat-out on ovals,” says one ex-Indycar engineer. “The cylinder pressures that would result in upping the boost to what would be needed for the F1 engine – in the order of 30-35 per cent – would be well within the constraints of the design. But it would be desirable to leave the rev limit at 12,000rpm, otherwise the valve gear would need to be modified and that would add expense.” So while keeping the revs at the Indycar limit of 12,000rpm but with extra boost, running on F1 fuel rather than ethanol – and the possible addition of some KERS electrical boost – it’s perfectly feasible that this could be a powerful, durable and much cheaper F1 engine. Recovering heat energy – the point of distinction that marks out the current F1 hybrids – would not be practical with this engine within the cost constraints. That would have implications upon the whole concept of the combustion chambers, exhausts and turbos. No, to fulfil the brief of a cheap engine that was competitive with the expensive 1.6 hybrids would mean the extra power over the Indycar base unit would come mainly from boost and fuel and, possibly, KERS.
But if there was a will to make it even more powerful – to regulate the current engines out of existence – it could be done, albeit at greater expense, by increasing the rev limit of the 2.2. How the FIA would go about the ‘equivalency’ and whether it tried to put an equivalent fuel flow on the client engine would also play a part in its competitiveness. But the point is, it could be made as competitive with the current hybrids as the FIA deemed it desirable to be. Its 37.5 per cent extra capacity and the engineering margins built into it to minimise Indycar rebuilds ensures that.
Such an engine would use more fuel than the current power unit – probably by as much as 30 per cent – and as such would require totally different monocoques to incorporate the greater fuel tank size and different engine packaging. But with the chassis regs set to change radically for 2017 anyway, that could be incorporated into them.
Budgets of around £100-150 million were used by each engine manufacturer to create their current hybrids. They charge somewhere between £13-17 million (€18-24 million) per season to supply a
Ilmor spent around £5 million in creating the much simpler current Indycar engine. The supply price for a two-car Indycar team for the season is around £1 million. There is plenty of headroom therefore for a good development budget to upgrade the Indycar motor to F1 specification. The addition of KERS would likely add a further £1 million or so to the budget.
The target price for the client engine is likely to be set somewhere in the region of £4-7 million (€6-10 million). How many teams would use it? Initially it could be as few as three: Red Bull, Toro Rosso and Force India, all of which are on record as approving of the idea. Manor? It would surely be very tempting for such a commercially knife-edge operation to slash its engine costs, but its contract with Mercedes could preclude that. Sauber has a multi-year agreement with Ferrari, Williams with Mercedes. The others – Ferrari, Mercedes, Renault (currently Lotus), McLaren-Honda – are all works entries with their own hybrids. But the idea would be to encourage in new entrants on the back of the much-reduced engine cost. Currently there are 10 teams, next season 11 (though the new Haas team is closely aligned with Ferrari and would not jeopardise that position); Ecclestone says he’d like to see 13 for 2017. So at least three teams, potentially up to six (if Manor is included), would be almost sure to run it were it available. That’s the outline of a perfectly feasible business model.
The development costs would need to be amortised up front for the independent supplier, so the price would likely need to be higher initially than subsequently. (This was supposed to happen with the hybrids, but hasn’t so far).
It is not a coincidence that one of those most enthusiastic about the Indycar-based client engine concept is Red Bull’s Christian Horner. Working for Red Bull as an engine consultant is Mario Illien, of Ilmor – the manufacturer of the Chevrolet-badged Indycar engine. You can see the probable links in the chain between Bernie, wanting a competitive championship to promote, Red Bull suddenly stymied from championship contention by not having a competitive hybrid engine – and Red Bull’s engine specialist coming up with a suggestion.
“I think this talk about an alternative engine would go away if Red Bull got a competitive engine supply,” says the typically forthright Niki Lauda – and he’s not alone in that view in the paddock. However, it’s about more than just that. That may have been the starting point, but the differing objectives of Red Bull, Ecclestone and Todt strongly align on this issue.
Ecclestone wants to reduce the manufacturers’ hold on power, Red Bull wishes to be in control of its own destiny and as for Todt: “I am a big supporter still of the hybrid engines and they are a great opportunity for the manufacturers. But they are too expensive for the private teams. My preference would be the hybrid engine prices are reduced to €12 million – we think this is reasonable. But if not, we are looking at this proposal… By regulation the FIA cannot have any influence on revenues but it is the FIA’s responsibility to keep alive the teams that are participating and attract newcomers… Also it’s very annoying that some teams are struggling to get an engine for next year. That should not happen.”
Here’s where it could get much trickier. Getting an equivalency formula through the F1 strategy group would be relatively simple in that Todt and Ecclestone together can more than out-vote any opposition. The next hurdle would normally be the F1 Commission. But the implicit message of the apparently premature posting on the FIA site of the tender invitation was that any ‘wrong’ vote here could be overridden.
To get a change made through the F1 Commission would require a 69.2 per cent majority (18 votes from 26) vote in favour. Ferrari may conceivably try to use its veto again at his point but in Mexico Todt clearly laid out the battle lines for that possibility. “Power is something very interesting. [With the veto] we are talking about sporting power, but you have people with power at a higher level… The veto is like having a gun in your pocket. You need to be very careful how you use it… [To invoke] the historic veto right, it has to be demonstrated that it is against their specific interests. If they are trying to suggest that one engine for independent teams is against their interests… I’m happy to debate that.”
Only once cleared by the F1 Commission would the idea go to the World Motorsport Council to be enshrined as regulation. How the commission is comprised under current governance is in the panel below.
The race promoters traditionally vote in alignment with Bernie, as does Rolex and Pirelli. Philip Morris votes with Ferrari. The current engine manufacturers would be against the client engine. The above votes would represent a 57.7 per cent vote in favour of change – not enough to carry it. Three more ‘yes’ votes would be needed. As such, the independents Williams, Sauber and Manor will be under pressure from Ecclestone to change their current ‘no’ stance.
So why would independents Williams, Sauber and Manor not be voting for the client engine anyway?
“Williams is always in support of any cost-control measures in Formula 1, and we respect the work that the FIA are doing in that regard,” says Claire Williams. “But we also have always come out in support of the current power unit that we have; it’s hugely relevant to the auto industry of today and in F1. This needs to be a technically innovative championship.”
“It’s correct to say the [hybrid] engines have been one of the major cost increase drivers from 2013-14,” says Sauber’s Monisha Kaltenborn. “But I don’t think it’s right to have two different engines… We have the hybrid engine now whether we like it or not. So we have to find a solution within that. Maybe something like the customers get the engine at a specified price, like in the resource restriction agreement – that’s the price. So if [an engine manufacturer] wants to spend 100 million it’s their problem. Because they’d do that anyway – Ferrari doesn’t need to sell engines to Sauber in order to do that if it wants… Our prime target is the price of the engine. In the bigger picture from the sport we won’t look that good if we back away from a technology that is relevant in the market today. People go out there and buy cars and they want to look at efficiency and the green impact. F1 is there to represent the high-end technologies.”
“The horse has bolted,” says John Booth, Manor’s outgoing team principal. “There should have been a price restriction written into the hybrid regulations. As for an alternative engine, my immediate thoughts are – put yourself in Merc’s position. They have worked to a set of regulations. They didn’t make the regs. They’ve spent God knows how much money. I’m sure they are still losing money on the customer engines. The idea that someone can come along and buy an engine for £7 million and the performance is equalised? If I were Merc I’d stick two fingers up and walk away.” (Which might be precisely what Ecclestone would like them to do…)
“It’s demeaning everything Mercedes has done on the technical front,” continues Booth. “None of us agree with the cost of the engines the way it’s turned out. But it’s from a regulation driven by the FIA in the first place.” But if push came to the shove of voting? “A lot of teams have multi-year deals with manufacturers. We’d have to consult with our partners initially and take a balanced view after that.”
That last sentence is the crucial one in this whole F1 Commission issue and explains the march Manor, Williams and Sauber are having to step to; they are almost certainly not in a position contractually to vote against their engine suppliers. But they want cheap engines.
There is a strong anti-competition element to both the Ferrari veto and to customer teams being beholden to vote with their engine suppliers – something that the European Union might find unlawful, should it look into it. That’s the real significance of the Force India/Sauber European Union complaint. Although ostensibly the complaint is about income distribution and the regulation-making process, the EU can use the specifics of the complaint as just a step-off point in a wider investigation. “It’s up to the EU to decide if they want to pick this up or not,” says Kaltenborn. “They are not limited by what we have written. In their system they can take up anything they want to. But we have limited our complaint to the make-up of the strategy group and the income distribution formula.”
That is the light in which you should see the FIA’s revelation that Ferrari used its veto to vote down the price reduction of the hybrids. It flagged-up (to the EU) the Scuderia’s right of veto, made very public an example of what had always been a discreet and private process. Together with the implied message that the F1 Commission would be over-ruled if need be, it warned Ferrari that it did not necessarily have the power it assumed it had.
“This is sporting competition, not asset protection,” said Ecclestone recently in a not very veiled criticism of Ferrari. Forget for a moment the hypocrisy of that and Ecclestone’s part in having made this situation possible in the first place (it was he who cut the income distribution and historical payments deals); think instead of why he’s saying what he’s saying now and note the fact that he’s serious enough about trying to reduce the manufacturers’ control of F1 that he’s prepared to go against his long-term ally – and F1’s most powerful brand – Ferrari.
It’s all quite delicately poised and everyone is being very careful about how they handle their weapons. Jean Todt and Mercedes, on opposing sides of this discussion, are trying to follow the path of diplomacy, but with each not fully knowing how their respective partners, Ecclestone and Ferrari, might choose to play it.
“I think it is very important to understand the financial constraints of some of the smaller teams and we remain committed to cost reductions,” says Mercedes’ Toto Wolff. “It’s not like the big teams are stubborn and saying, ‘well, we don’t want to hear anything of that.’ This is a platform that functions with all of us. We are not just saying we don’t care what happens behind us or aside of us. I think Ferrari [using the veto on the price] is because it was having imposed on it ways that are very difficult to cope with for a commercially oriented entity. I can understand Ferrari’s standpoint and I can also understand it’s a very controversial and difficult situation for some of the smaller teams, and of course how it’s being brought forward, it doesn’t look very neat – but there is a much more to it than just a sheer veto and saying no.”
It could be that F1 will never see these adapted Indycar engines – that it won’t need to, that a way can be found for the existing power units to be sold to independents at a significant reduction in price. That would be Todt’s preference and he has a way of sailing through treacherous political waters and coming out the other side unscathed. But it may not be what either Ferrari or Ecclestone is prepared to settle for.
Ferrari, as a now public company, may feel itself unable to supply engines at what it claims is an uneconomic price. Further, it may react aggressively if it feels its historic right of veto is being threatened. As such it could conceivably dare the sport to go against it.
Ecclestone, advised by his old partner Max Mosley, is at least as much interested in neutralising the car companies’ power over F1 as he is in reducing the price of the hybrids. A competitive, independently supplied power unit, available to anyone at a fraction of the price of factory engines, would be the perfect instrument with which to do that.
Watching how this all plays out is likely to be fascinating – and slightly scary.