Understanding the motorsport industry

How much does an F1 car cost ? – Part 2

In this second post on “How much does an F1 car cost?” I am putting a price on bought-in parts that F1 teams pay for such as engines & brakes.

How much does an F1 car cost ?
How much does an F1 car cost ?

Photo Credit: julien.reboulet via Compfight cc

In Part 1 we discussed why it is so difficult to put a fixed price on a Formula 1 car due to the enormous and ever changing development spending going on behind the scenes. Teams typically try to produce as much of the car themselves as they can as it allows them to keep designs and technologies secret. Teams are reluctant to go to third party suppliers even if non-disclosure agreements are in place as it is inevitable that knowledge will eventually leak to other teams. This secrecy means they end up not actually directly paying for the majority of the parts in their cars, they come out of the general running cost.

There are however several significant parts on most Formula 1 cars which are engineered and made by outside suppliers. This happens where the technology or knowledge required to produce the parts is too specialised to justify investing in them yourself but it allows us to put some more accurate figures against some very familiar car parts.

The cost of stopping power
One of the most obvious examples where parts are bought-in is for the car’s brake system. Discs and pads are now carbon-carbon on all cars and are produced by specialist firms such as Brembo, Carbon Industrie and Hitco. The machinery and processes used to produce these parts are tremendously complicated and parts made for racing cars are typically off-cuts from large quantities made for aerospace brake systems. It can take around 6 months to produce a single brake disc.

F1 brake caliper and disc
F1 brake caliper and disc

Photo Credit: Ðariusz via Compfight cc

A Formula 1 brake disc typically costs between $2,000 and $3,000 depending on the supplier and the complexity of the cooling holes machined into it. Pads are cheaper at around $800 a pair, but it means that a full set of discs and pads for a Formula 1 car can cost as much as $15,000! If the wear rates are kept under control then a set can last for several races but top teams will still fit new material for every race weekend plus a spare set for Friday free practice running.

Engine budget
The heart of any Grand Prix car is its engine, and it also represents one of the single biggest outlays for the teams. The manufacturers can charge around €18m per 2 car team for a season’s supply of engines. This would include the supply of dedicated track support engineers and technicians plus any dyno testing that the team may require. These arrangements and the final cost will vary according to commercial contracts. Renault for example want their engine in the Red Bull because they get so much positive exposure from the association so will not charge a large fee. The engine manufacturers are in any case still effectively a sponsor and are not generally seeking to make a profit from the supply of engines. Commercial exposure and association of their brand with high technology and sporting success is simply a marketing exercise and so the true cost of the engine development, manufacture and supply is likely to be much higher. Ferrari and Mercedes have ‘works’ teams of course and even the engine in this case is an internal cost.

Fomrula 1 V8 engine
Formula 1 V8 engine

Photo Credit: Pauls imaging via Compfight cc

The introduction of the engine freeze in 2007 did a great deal to control the cost of engine development. The partnership of Mercedes-Benz and Mclaren in the late 90’s caused a huge acceleration in the pace of engine technology and the manufacturers went to war with giants such as BMW, Honda, Toyota, Renault and of course Ferrari & Mercedes-Benz desperate to produce the most powerful and highest revving engine. The introduction of the 2.4litre V8 derivatives of the F1 engine took this to its peak in 2006 with several manufacturers producing engines capable of producing over 800hp and revving to more than 20,000rpm. In this period each manufacturer was likely to be spending in the region of €150 million a year on Formula 1. The 18,000rpm rev limit and a freeze on the majority of engine development has gone a long way to controlling this expenditure and has led to manufacturers being able to offer complete engine supplies for the €18 figure mentioned earlier.

It seems certain however that the introduction of the new generation engine from 2014 will increase this cost substantially once again. New technologies such as high power KERS, WERS (waste energy recovery) and high pressure direct injection are great for road car synergies and the sport’s environmental credentials but someone will have to pay for it and many midfield teams are very worried by the prospect. If you were looking to start a new Formula 1 team tomorrow, the cost of the engine is likely to be your biggest single concern.

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