What's delaying Mercedes' commitment to Formula E's future? - The Race
Formula E

What’s delaying Mercedes’ commitment to Formula E’s future?

May 12 2021
By Sam Smith

Have they? Haven’t they? Will they? Won’t they?

The guesses about Mercedes’ future in Formula E were almost as ubiquitous as the obscenely expensive watches and nonchalant wealthy folk in red slacks and blazers amid the streets of the Principality last week.

What we do know is that Mercedes is still playing coy, still ‘in discussions’ and still not completely comfortable in showing its true intentions in the all-electric championship beyond its current Gen2-flavoured commitment.

Officially Mercedes EQ is yet to sign up but it is believed that some form of agreement is in place, with certain caveats, that it will indeed race in the new rules set from the end of next year onwards.

One of these provisos is believed to be a kind of holding pattern agreement until a Daimler board meeting later this summer. Should this be the case then it seems logic may win out and Mercedes continues with a programme it first announced in the summer of 2017.

All the pointers are that a renewal of the programme will happen. Why else would Mercedes shift its structure to Brackley and go on an expansive recruitment drive recently?

Daimler is likely to phase out internal combustion engine-powered cars ahead of its target of 2039 because of increased demand for its electric Mercedes models. This news came via an interview that chief executive Ola Källenius gave to the Financial Times this week.

Mercedes is also winning in Formula E at the moment. Four victories from eight races since August 2020 means the Silver Arrows are the leading force right now and hold a slender advantage in the teams’ standings despite a double DNF in Monaco last time out.

Nyck de Vries Mercedes Formula E Monaco 2021

Part of the riddle-like tale being purported right now of Mercedes not signing up to Gen3 may well be technically true.

Through a complex array of commercial considerations that have been asked of the rights holders of Formula E, it is believed to pivot around ultimately getting improved returns on investment and a bigger share of future commercial pies.

This, in particular, is an interesting topic because the Mercedes EQ team is understood to be not far off from being self-funding. Therefore it shouldn’t be a particular financial drain on Daimler, which as the parent company will ultimately have the sanctioning power in shaping Mercedes’ Formula E future.

So it should be a relatively straightforward decision. Yet it palpably isn’t or hasn’t been because two months after the Gen3 registration deadline it is ever so slightly getting left behind on preparing practically and technically for a season that is likely to start in 18 months’ time.

“There’s different ways of incentivising the stakeholders and ultimately the teams and the manufacturers are stakeholders in the series” :: Ian James, Mercedes FE team boss

So apart from the commercial powerplay, is there something else, perhaps something bigger, causing the hold up? Is Mercedes lobbying for an official stakeholding in Formula E, perhaps?

This is not as fanciful as it may initially read. There is in fact a precedent as Techeetah’s Sheng Li, founder of the SECA sports marketing company, has what is believed to be around a 12% stake in Formula E already.

It was given relatively short shrift though by Mercedes Formula E team principal, Ian James, who told The Race that “there’s no plans or commitment from outside at the moment to look at taking a stake holding in Formula E as an operation”.

“There’s different ways of incentivising the stakeholders and ultimately the teams and the manufacturers are stakeholders in the series,” he continued.

“There’s no one size fits all [commercial model] and that coupled with the fact that [Formula E] is still very much a start-up, I think that there’s again probably different approaches required compared with other series.

“There’s no hard and fast rule or guideline for how we want to go forward and I think that the most important thing is that those discussions remain open and we can still adjust the model when necessary going forward.”

Whatever transpires, the entire episode of one of Formula E’s grandee manufacturers teetering on the brink of commitment to its future surely indicates to the rights holders that making its commercial, sporting and technical future more attractive and robust are now vital.

The Mercedes-Benz Formula E Ltd company, which is controlled by Daimler UK, had some notable changes earlier this year as financial director Laura Goodrick was promoted to the board.

She was on site in Monaco last week for the first time this season, no doubt overseeing the latest meetings with Formula E execs.

Goodrick and others at Mercedes, including Toto Wolff, head of Mercedes-Benz motorsport, have been making the case for a continuation to those who aren’t fully convinced. Britta Seeger, member of the Board of Management of Daimler AG and of the Supervisory Board of Daimler Mobility AG, is among those who were said to have taken a very close interest about what the specific returns might be in the upcoming years.

Interwoven into this are Formula E’s own challenges, which have included how it meets the challenges of racing in the present pandemic while maintaining and continuing the momentum gained after the first season of Gen2 racing in 2019.

A new team formed over the last 18 months by new Formula E CEO Jamie Reigle is still gelling but in some areas, notably in communications, it has in fact crumbled spectacularly in recent months, with several resignations and enforced changes. This may be a mere peripheral matter. But it certainly doesn’t help.

Mercedes has almost certainly not reached the end of its Formula E journey. But it may well have charged-up a re-calibration of more existential signposts that one of motorsport’s most exciting and future-relevant world championships has to keep on top of if it wishes to start to fulfil its amazing potential over the next few years.

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