In the aftermath of Sunday’s French Grand Prix – arguably the most torpid Formula 1 race for years, with very little ‘grand’ about it – much was said about the state of F1, particularly after sweeping regulatory changes were made this year to facilitate overtaking.a comment made by Mercedes F1 CEO Toto Wolff was largely overlooked: “Now the second weakness [Valtteri Bottas] needs to attack is tyre management. He’s very aware of that, where he needs to improve…” According to Wolff the first, namely single-lap pace, has been addressed by his driver.
In a championship where tyre management is absolutely critical – ask Haas team principal Guenther Steiner, who has referred to tyre selection as a “Kinder Surprise”, or lucky dip, about that one – such references by team bosses are expected. After all, Bottas’s team mate Lewis Hamilton won the other six races, placing second in two rounds.
But of course on Sunday Bottas placed second, not third-to-last, as did the sole Haas to see the chequered flag. Bottas has won two races on merit this year, and placed second in four of six rounds, with his only bottom-step podium coming in Monaco after Max Verstappen-induced incident, for which the Red Bull driver was penalised.
That leaves Canada, where a qualifying error – unrelated to tyres – blotted Valtteri’s record. Thus, by inference, Bottas’s relative tyre management problems has not cost the team places this year, nor can it be blamed for ‘only’ six one-twos rather a clean sweep this year. Still, on Sunday the team achieved its 10th consecutive F1 victory, and could equal McLaren’s 1988 record of 11 in a row this weekend.
Granted, two of those came last season. And Bahrain this year was in the pocket of Charles Leclerc’s red Ferrari overalls before engine maladies cruelly intervened. But, if anything, such factors illustrate the utter domination of the Mercedes F1 Team achieved by virtue of doing the most complete job in every single aspect of what is probably the most complex pastime on earth.
Indeed, with five double world titles since 2014 and virtually unassailable leads in both 2019 hunts – four-time world champion Sebastian Vettel needs to coax his Ferrari to three consecutive wins with Hamilton retiring thrice simply to close the gap to one point in the drivers’ chase.
At this rate Mercedes could clinch a sixth teams’ title by Singapore in September. It will take an extraordinary turnaround from Ferrari to stop the silver team eclipsing their 1999-2004 title runs.
Given that the 2020 technical and sporting regulations are little changed from current sets, it’s fair to speculate that Mercedes will be the team to beat in next year’s championships. They could realistic sweep the 2014-20 hybrid era championships thanks to a chain of events set into motion by current Liberty F1 CEO Ross Brawn, which saw Mercedes invest heavily in F1 a decade ago.
But inevitably, regardless of the duration of victory streaks in whatever activity, the principle of diminishing returns soon kicks in. And what could be more galling than constant criticism while striving for perfection?
Brands too often overlook that passion is driven by deep-rooted human needs for competition and fallibility, not by showboating perfectionism. Just as many fans in the noughties begged for an end to ‘Peak Ferrari’ so their focus has now switched to Mercedes.
Let us assume – and such conjecture is founded on the momentum the team has accumulated under the current regulations – that Mercedes makes it seven double titles on the bounce, the logical question posed to F1 management during a notional executive meeting held in the most forbidding of Stuttgart boardrooms must surely be: “Why should we continue in Formula 1?”
The company asked itself the same question at the end of 1955, having won everything in sight for two years. True, on that occasion the tragedy of that year’s horrific Le Mans disaster also prompted the response, but Mercedes understood then that further defeat would tarnish its winning record – and thus the official line: ‘We have nothing left to prove’. Now Mercedes has even less to prove. Cue the ‘mic drop’ and stage exit?
Forget not that the make-up of the Mercedes board has changed considerably since the company committed to its current F1 campaign (initially as engine supplier) during the nineties: Then-CEO Jürgen Schrempp was boss for ten years, and on a mission to build a global car company, having taken Daimler into a ‘heavenly marriage’ with Chrysler, that soon ended in acrimonious divorce.
Indeed, the first (1993) F1 Saubers bore the legend ‘Concept by Mercedes’ despite being powered by Ilmor engines. Schrempp initiated the purchase and rebranding of Ilmor to Mercedes High Performance Engines, then approved a 40 per cent stake in McLaren – in turn sold by successor Dieter Zetsche to fund the purchase of Brawn GP, which waltzed both 2009 titles as independent team using customer Mercedes engines.
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Now, though, Zetsche is in retirement – although the word is he will return as chairman of Daimler’s Supervisory Board once the mandatory two-year ‘cooling off’ period expires – replaced by Ola Källenius, an economics/business management graduate and the first non-engineer to be appointed chairman of the Board of Management/Head of Mercedes Passenger Cars.
Mercedes insiders point to Källenius’s time at McLaren as chief operating officer during its ‘works’ team era and his spells as managing director of the Mercedes F1 engine operation and vice president of AMG as proof his ‘petrolheadedness’. However his CV also lists a variety of senior procurement/sales postings across Europe and the USA, so it is clear that his is a structured Daimler career path.
The Swede recently unveiled his ‘Ambition 2039’ business plan, which outlines plans to make the entire Mercedes-Benz Cars offering completely CO2-neutral within 20 years. A cornerstone of his business plan is to generate more than half of car sales via electric cars and plug-in hybrids.
Tellingly, where the Mercedes website invites you to ‘Discover More’, you will find ‘Electromobility’ listed at the top, followed by Innovation, Design, Exhibitions, Museums and, eventually, Sports (including F1).
Mercedes topped last year’s ‘Big Three Luxury Car’ sales log, in the process trouncing BMW and Audi, neither of which are in F1. But this week BMW announced plans to speed up its electrification programmes by launching 25 e-models, half of them fully electric, by 2023, while Audi has similar plans for its e-Tron brand. Thus the battle for electrified luxury cars is being taken straight into Tesla territory.
Such projects require massive funding. Yet simultaneously Källenius plans to achieve $6bn in efficiency savings by 2021 (note the date) and cut headcounts by 10,000, all while ramping up for profitable e-mobility and autonomous vehicles. This begs the questions: ‘Where does F1 fit into all this?’ Previously Mercedes withdrew from DTM after similar lines of questioning…
Motor manufacturers participate in Formula 1 for three main reasons – technology transfer, brand awareness and vehicle sales – and generally fund their programmes through contributions from the three divisions even if a single (big) corporate pot ultimately covers such budgets.
Thus, research and development, marketing and sales divisions fund the F1 team directly or indirectly, and thus have input into its operation. Given F1’s (broad) retention of current power units regulations, the increasing use of stock parts and the far-reaching implications of cost caps, post-2020 the R&D contribution is likely to come under considerable scrutiny, and that reckons without internal competition from Formula E.
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However, given F1’s focus on cost caps, will F1 not ultimately be more cost-effective – in line with Källenius’s strategic cornerstones? Absolutely, but they are also likely to level the playing field, (hopefully) making the current steamroller-type domination well-nigh impossible.
Would, then, a brand as proud as Mercedes be content to finish second (or worse) behind independent team using its customer engines? The 2009 season answered that succinctly – Mercedes immediately dumped McLaren, acquired champions Brawn and ramped up its new team through massive investments and a doubling of resources, thereby creating a dominant operation. That should prove virtually impossible under cost cap regulations.
Equally, such a situation would be highly damaging for the Mercedes brand – and ultimately vehicle sales – so why risk it? The brand is riding the crest of the F1 wave, but, as every surfer knows, the only way from up there is down, and into frothy water.
The team’s current F1 commitment expires at end-2020; thereafter Mercedes would need to re-commit to F1 for, likely, another five years – while pushing to meet Källenius’s ambitious objectives and targets.
Concurrently income from Liberty is expected to dip as a revised revenue structure kicks in, one which rewards teams on a performance basis rather than an extremely lucrative by-right bonus structure from which Mercedes benefits massively. When the time comes, the board will surely pose searching questions about returns on investment and the future of F1, particularly in these environmentally-sensitive times.
Then there is the question of team leadership: As RaceFans revealed last month the future of Liberty CEO/chairman Chase Carey is under discussion, with the most likely scenario being that the 65-year-old will remain as chairman, with the replacement CEO drawn from F1 ranks.
Wolff, whose Mercedes contract and 30 per cent shareholding in the team expires at the end of 2020, is said by solid sources to be in the frame. While the Austrian dismissed such suggestions, he stopped short of issuing outright denials, but did confirm his contractual situation. Subsequently, his fellow (10 per cent) shareholder Niki Lauda passed away, further complicating the situation.
Against that background, let us consider the changes and challenges facing Mercedes F1: A new holding company chairman/CEO, one with different values and visions from his predecessor; New corporate road map calling for a strategic overhaul of existing product ranges and massive cuts/savings; Much mooted changes at the top of Liberty; Stringent new regulations that level the playing field and mitigate against big-spending teams; Potentially (much) reduced F1 income; Increasing technical restrictions, thus reducing road relevance; And the need to commit medium-long term to F1 at a time of ecological sensitivity/competition from Formula E.
All factors considered, it would be no surprise were arguments over the F1 team’s future to rage during future board meetings, with a number of scenarios being considered. Of course, the fate of the team’s state-of-the-art Brackley facility would come under discussion, as would the future of the Brixworth engine factory, which, though, currently undertakes various projects on behalf of group entities.
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In the event that the company exits F1, Mercedes High Performance Powerplants – as it is now known – could conceivably continue as F1 customer engine supplier given that the majority of hybrid-era expenditure was incurred pre-2014. The post-2020 technical regulations continue largely as is, although 2021’s sporting regulations impose restrictions on activities such as dynamometer runs to further save costs.
Under such a scenario the Mercedes brand could claim kudos when its engines win but blames teams when they lose, all while cost-effectively keeping the Three-pointed Star in F1.
That leaves the future of Brackley under scrutiny: What to do with the operation should a boardroom vote go against continuing in F1?
Who, though, would buy the team – and the largest standalone factory in F1 history – as a running concern, particularly given F1’s pending downsize? Then there is the question of labour laws and the company’s reputation for ethics, making a simple shut down a no-go.
That leaves a third option: fully integrate what is the company’s most advanced research and development operation into Mercedes R&D by deploying the superb resources and supreme multi-championship-winning skills of hundreds of engineers and technicians to develop and produce a range of prototype, show and concept cars for Mercedes, plus hone the team’s Formula E racers.
What, after all, are F1 cars other than prototypes that eventually prove (or not) their worth in competition through ongoing and meticulous development? To support Källenius’s new model programme and electrification targets, the company would in any event need to boost the number of R&D bases from six in the near future. Britain’s motor racing ‘cottage industry’, too, would benefit enormously in the process.
What are the chances that all this comes to pass? That depends on boardroom answers to a searching question that will surely be asked within the next year: “Why should Mercedes continue in Formula 1?”
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