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Why Red Bull Won’t Build An F1 Power Unit

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If there’s ONE reason Red Bull Racing shouldn’t pursue building their own F1 power unit, it’s the lack of reversibility. If they invest in power unit capabilities, they will have to stick their guns out till they get it right or till the end of the 2025 Formula 1 season – both options offering higher risk than reward. 

Yes, Honda shocked Formula 1 by announcing their decision to quit the sport despite being the only power unit manufacturer in the hybrid-turbo era to win with two different teams (Red Bull Racing and Alpha Tauri). In fact, irony wasn’t lost when Honda re-committed to Indy Car a day after announcing their exit from Formula 1 (we’ve elaborated further on this on the Inside Line F1 Podcast episode below). But the bigger shock in the whole Red Bull Racing – Honda – Formula 1 story line is Red Bull Racing’s serious consideration of building their own engines using Honda’s power unit IP.

Red Bull Racing has continuously impressed in Formula 1 by building race and championship winning cars despite being an energy drinks brand. In which case, one isn’t wrong in wondering why a Red Bull F1 power unit can’t be built with Honda’s IP. After all, both areas are outside the comfort zone of a company that otherwise manufactures energy drinks. In my view, there are two reasons why Red Bull Racing might not go down the road of building a F1 power unit. 

First, the sheer cost of undertaking this exercise. This can be further split into start up (or setup costs) and maintenance costs. The setup costs includes buying Honda’s IP, infrastructure to host the power unit team in Milton Keynes (or elsewhere) and hiring the right set of people (Andy Cowell?) to build and manage Red Bull Racing’s power units. The maintenance costs include regular testing and upgrading the power units as the season(s) go – this is standard for all power units in Formula 1.

Also the business model of manufacturing either chassis or power units or both differ drastically in Formula 1. As you may already know, Red Bull Racing has operated as a chassis manufacturer till date. Yes, Red Bull’s F1 power unit ambition is a problem money can solve but again, they have never run full-fledged teams on the chassis and power unit side of the business. Understandably, such a setup requires an investment appetite Red Bull can afford but haven’t pursued till date. 

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Red Bull F1 Power Units: Can Afford The Costs But Not The Time

For a moment, let’s assume that Red Bull (the energy drinks brand) funds the costs involved, the truth is that Red Bull Racing might not be able to immediately build the wherewithal to compete against the power units of Mercedes and others. The 2020 Formula 1 season is the seventh of the ongoing hybrid-turbo era and the struggles of Renault, Ferrari and Honda have been well documented. Red Bull Racing need an option that will give a higher guarantee of their competitiveness from 2022 and all the way till 2026. This means a power unit that’s robust, reliable and powerful – and is upgraded on-the-go.

For the existing power unit manufacturers, costs are absorbed by the parent company under the R&D column. After all, learning from the hybrid-turbo power units is expected to fuel future technologies for sustainable mobility and so on. However for Red Bull Racing, there’s almost nowhere the learning from building their own power units can be applied to (apart from cool videos for the Red Bull Content Pool). But could it appeal to a car manufacturer who could partner Red Bull Racing?

Will An External Manufacturer Be Interested?

This is where one wonders if an external manufacturer would be interested in partnering Red Bull Racing (rebadging a Red Bull F1 power unit) via the Honda IP route. This would be ideal for Red Bull Racing – increased know-how, sharing of costs and risk, etc. However, the question has to be asked if the risk is higher for the external manufacturer in case this project fails (depending on what the metric is) and if they’re willing to enter Formula 1 with what’s publicly not known as their IP and design. Likewise for if they win, too. Would the credit go to Honda rather than the external manufacturer? And before all else, one assumes that the hybrid-turbo regulations appeal to this external manufacturer.

As ideal as the external manufacturer route may be for Red Bull Racing and Formula 1, one assumes that Red Bull Racing might be out of time to pursue such an option. Entering Formula 1 are decisions that require Board-level approvals and are a part of a larger corporate objective. And of course, COVID-19 would also be a factor in such decision-making. In my view, I don’t see an external manufacturer partnering Red Bull Racing in this ambitious move on a technical level. It could be that Red Bull Racing swing an Aston Martin-type sponsorship, if at all. 

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One last word about costs – the setup costs for Red Bull Racing would be fixed, it’s the maintenance costs that would be high. This is why Red Bull Racing are pushing for a design freeze from the 2022 Formula 1 season (also safe to assume that no external manufacturer is interested). Their objective is to get Honda to keep developing their power units till the end of the 2021 Formula 1 season, buy the IP and continue running the same power units till the end of the 2025 Formula 1 season. This is THE only way a Red Bull F1 power unit idea might work. 

Again, it seems unlikely that such a decision (power unit design freeze) might be reached unless the impact of COVID-19 worsens over the next few months. A design freeze would bring significant cost savings for the sport and give us a unique situation where Red Bull Racing would build their own engines!

Will Red Bull Build Power Units In 2026, Too?

But Formula 1 is a on path that indicates that every passing power unit regulation will lean towards sustainability and future automotive technologies. So what about Red Bull Racing’s power unit investments after the 2025 Formula 1 season? Will they continue to develop power units when the new regulations come into force in 2026, too? Truth be told, they will need a power unit supplier then who will ‘build’ the power unit.

The other aspect that’s been widely discussed is how Red Bull Racing could ‘sell’ their power units to customers (a la Mercedes and Ferrari) and earn from their investments. Again, why would Haas or Williams choose a Red Bull Racing power unit over Ferrari or Mercedes? Red Bull Racing have already indicated that their step in the direction of building their own power units is only for their two teams. The only way Red Bull Racing could attract customers is after proving the might of their power units and if a design freeze comes through – one that is crucial to Red Bull Racing maintaining their power unit performance and not sliding back after their rivals bring upgrades.

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An Irreversible Decision For Red Bull Racing

The second and more important reason why Red Bull Racing might not go down this route is because such a decision is irreversible. If they invest to build their power unit capabilities, they will have to stick their guns out till they don’t get it right or till the end of the 2025 Formula 1 season. The risks could far outweigh the rewards, in such case. It could see Red Bull Racing not only lose their competitiveness but also their ability to attract star drivers such as Max Verstappen. 

Red Bull Racing is a risk taker in the world of Formula 1 – Max Verstappen’s early promotion to the A-team being one such example. However, they’ve kept reversibility as a central theme while taking risks. This is what’s allowed them to test Daniil Kvyat, Pierre Gasly and Alexander Albon over the last few seasons; knowing that they could reverse their decisions and cut-down on the risk factor. To me, it’s clear that Red Bull F1 power units would be an irreversible decision. 

Could a worst case scenario be that Red Bull leaves Formula 1 after sinking millions into a Red Bull F1 power unit project without significant returns? 

Will Max Verstappen Trust A Red Bull F1 Power Unit?

In fact, a Red Bull F1 power unit might have a knock-on effect on Verstappen’s patience and continued belief in the team. Would Verstappen be willing to see out his full term and / or renew further if Red Bull Racing’s competitiveness isn’t guaranteed? Could the risk of losing Verstappen force Red Bull Racing to settle for Renault? After all, we’ve known all along that Red Bull ‘gives you wings’ and not power units! But will this change from 2022? 

 

 

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Kunal