Following Max Mosley's warning that the engine manufacturers effectively control F1, Bernie Ecclestone and (FIA president) Jean Todt have scored an important victory over them with the news that a cost cap has been agreed.

Fuelled (no pun intended) by the high cost of engines to manufacturers, not to mention Red Bull's much publicised difficulty in securing a suitable deal, Ecclestone and the FIA sought an independent engine manufacturer who would supply those teams unwilling - or unable - to meet the financial demands of Mercedes, Ferrari, Renault and Honda.

When the manufacturers railroaded the idea of a new independent, and cheaper, supply, they were given a (mid-January) deadline to come up with a solution or the sport's powers-that-be would press ahead with their plan… or so they threatened.

Following yesterday's meeting of the Strategy Group, and today's meeting of the F1 Commission, the manufacturers have agreed to reduce the price of their packages from as much as €20m a year to a far more affordable €12m. The manufacturers have also guaranteed that all teams will be supplied.

The manufacturers’ capitulation to Ecclestone’s and Todt’s demands means that the independent supply move is effectively dead and buried.

For their part, the FIA agreed that the new regulations will come into force in 2018 and will remain unchanged for three years, thereby guaranteeing some much needed stability.

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READERS COMMENTS

1. Posted by Tweek, 24/01/2016 18:38

"I wish I sold stuff with an €8,000,000 mark up. Like nonickname I wanna know if this is per unit or per season. I must admit I prefer additional suppliers just for free market competition. There is a lingering thought that the current manufacturers are taking this action in order to maintain their monopoly on the situation. "

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2. Posted by Spindoctor, 24/01/2016 13:04

"A couple of glitches in my post sadly I can't edit them, but I think my point is still clear."

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3. Posted by Spindoctor, 24/01/2016 13:01

"Assuming that nobody reneges and tries to mess about with the PUs between now & 2021, this is an obvious development. It's no "capitulation" simply a reflection of basic economics. I see two factors at work.

The first consideration is that Motor Manufacturers (Mercedes, Renault et al) are not involved in F1 directly to profit from making PUs and\or running a Team. Their primary objectives are complex and manifold including notions of Brand Recognition, PR for their mainstream activities, being seen as Technological innovators\leaders etc. Flogging PUs to other teams is a nice little earner, but not essential to the enterprise.

The second consideration is purely the economics of developing technology.
The cost of the Hybrid PUs was front-end loaded with initial design & development. That investment is now being rapidly amortised\written-off. After the initial peak, the per-unit cost of production\development\maintenance is reducing year-on-year. This is absolutely normal in all forms of technology-based enterprise. The E12m per team for supplying PUs may not lead to profits, but will increasingly reflect the costs of supply.

The cost-cap isn't some "victory" for FIA\Bernie (spin notwithstanding). It's a reflection of the technical & economic forces at work. AS I see it the biggest beneficiaries of the FIA guarantee that it won't fiddle with the PU Regulations until 2021 is good news for Merc, Renualt etc. What it means is that over the next 5 years they'll maximise the diverse returns (technical, PR and possibly financial) on their investment.

The brutal truth is that although the non-factory teams will have a predictable cost for PUs it won't alter the huge costs of developing the rest of the car, particularly the aerodynamics. That of course is what makes the Ferrari\Haas so interesting."

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4. Posted by nonickname, 20/01/2016 15:16

"Hi -ape-,
this has always happened. Check the differences in the DFV's supplied to Lotus and the other teams in the past.Both Lotus and McLaren got 'better' motors.The designers and drivers made the difference."

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5. Posted by nonickname, 20/01/2016 12:14

"I know I am stupid but is this per engine or per team per year?"

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6. Posted by -ape-, 20/01/2016 9:29

"Good , all teams will be supplied ......with a less powerfull engine LOL "

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7. Posted by F One, 19/01/2016 21:50

"I hoe one of these new rules is scrapping DRS. F1 is the 1st motorsport to even manage to make overtaking boring."

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Manufacturers agree engine cost cap

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