Audi joined F1, who climbed who？ ｜ Sports events

Economic observation of original half-moon sports

Author: half moon

Words in this article: 3366 words

Suggested reading time: 11 minutes

After the long-lost offseason, the starting signal of F1 finally lights up again.

On February 29th, Beijing time, the opening match of the 2024 F1 season started in bahrain international circuit. In the first race of the new season, Red Bull Team still maintained a strong performance. In 2023, driver champion Vestapan and teammate Perez won the championship and runner-up, while the five major teams-Red Bull, Ferrari, McLaren, Mei Ben and Aston Martin-won the top ten.

In the competition for the "Earth Group", Guanyu Zhou of Sauber Team won successfully and achieved the 11th place. Bahrain can be called the "blessed land" for China drivers. In the mid-2022 season, Guanyu Zhou’s F1 "debut" was staged in Bahrain, and the first show, the tenth successful score, surprised the paddock.

For Sauber, Guanyu Zhou’s stable performance in the past three years has lived up to their vision of material selection. However, as a "small team", Sauber needs to tap the potential of the car and introduce more resources to support it if he wants to make further progress in F1.

Sauber will wait for another two years, and in the 2026 season, Audi will start to enter the market.

The second plum blossom? Audi wants to acquire 100% equity of Sauber Team.

Before talking about Audi’s entry into F1, let’s review several key nodes.

First, at the end of August 2022, Audi officially announced that it would enter F1 in 2026. Marcus duesman, then chairman of Audi’s board of directors, said that it is an excellent opportunity for Audi to enter F1 by adopting the new competition rules of power unit in 2026.

Second, on October 26th, 2022, Audi officially announced that it would choose Sauber as its strategic partner to enter F1. Sauber will compete as an Audi factory team and use the power unit provided by Audi.

Third, in January 2023, Audi officially announced the acquisition of a minority stake in Sauber. Duesman, the former CEO of Audi, planned to gradually acquire most of Sober’s shares through a three-year plan. However, according to recent reports, Gernoth dorna, who took over from duesman, adjusted his plan to seek 100% control at the end of 2023. It is rumored that Oliver Hofmann, chief technology officer of Audi, will step down as CTO and take over the F1 project.

Audi wants to hold 100% of Sauber, just like the heart of Si Mazhao, which is well known. Audi’s ambition to enter F1 is nothing more than trying to make some achievements in F1. The last time a well-known car brand that was talked about by car fans bought a team and entered F1, it was also the German Trident. At that time, Mei Ben, also known as Durham Group, and its partner Aabar Investment Company acquired 75.1% and 24.9% shares of Brown GP Team in November 2009 and February 2011, respectively, and formally entered the paddock.

With strong R&D and investment, Mei Ben started the Eight Crown Dynasty. Also backed by the powerful Volkswagen Group, there is no reason for fans not to believe that Audi will make a breakthrough in the paddock, and even "re-carve" Mei Ben’s achievements.

The way to enter F1 is not only to acquire the existing fleet, but also to "expand the army". Why not choose the latter? Cost and adaptability may be the two major factors that Audi chooses to acquire.

Compared with the way of "expanding the army", the cost of Audi’s acquisition of Sauber team to enter F1 is obviously lower. Especially considering the overall appreciation of F1 events, letting a new team join means that the profits of 10 teams are less now. The lack of "cake" is obviously not happy for those with vested interests.

According to the 2023 financial report released by Free Media Group a few days ago, the total dividends of 10 F1 teams increased from $1.157 billion in 2022 to $1.215 billion in 2023.

In 2023, Team Andreetti of the United States has publicly stated that it wants to join the ranks of F1. Even though the FIA’s attitude is to expand the F1 market, especially the American market, nothing happened in the end. The prerequisite for Andreetti team to join is to pay a fee of 200 million US dollars, which is equivalent to buying F1 seats to compensate other teams.

The cost of $200 million is not a stumbling block for Audi, but it is the most difficult to win the consent of the other 10 teams. The lobbying cost and time cost involved are the most "expensive" for Audi. Instead of stumbling, it is better to buy a "Earth Group" team directly.

Secondly, the acquisition of Sauber will also enable Audi to retain the main team working structure after entering F1. As the apple of today’s motor racing, the operation of an F1 team involves many aspects, and these staff will play a key role in helping Audi to adapt to the pace of the paddock. Although Audi has a long history in racing, the German brand still needs to learn and adapt in F1.

According to foreign media reports, in the three years from 2023 to 2025, Audi will acquire 75% of Sauber’s shares for 450 million US dollars, while Sauber’s team’s valuation is about 600 million US dollars. This figure is less than 1% for Audi Group, which earned more than 61.8 billion euros (about 67 billion US dollars) in fiscal year 2022.

The new regulations in 2026 are in line with Audi’s strategic goals.

The importance of power unit to F1 racing car, I believe fans must know it very well. In August 2022, the FIA officially announced that in the 2026 season, the brand-new F1 power unit will be officially implemented. This will be the biggest change in the F1 power unit since the application of the V6 engine of the hybrid power system in 2014.

The most obvious change is that the new power unit puts more emphasis on electric energy and sustainable fuel. The power output of the new power unit will be tripled, and the transition from 120kW to 350kW motor-generator will bring more power. After introducing more powerful electric energy, the peak output of the system will exceed 1000 horsepower. The application of sustainable fuels has always been the direction of F1 efforts. F1 aims to fully use 100% sustainable fuel in 2026. These two tasks will make F1 stadium more environmentally friendly.

It is worth mentioning that the key to Audi’s entry into F1 is that the FIA abolished the energy recovery system called MGU-H in the new regulations in 2026. In short, MGU-H can provide power for MGU-K by converting thermal energy in exhaust gas into electrical energy, and the latter’s function is to convert kinetic energy generated during braking into electrical energy.

As a very advanced and complex technology, MGU-H is very expensive to build and is one of the more expensive parts in racing cars. So this is also a power component that many teams and engine suppliers want to abolish. Audi is willing to join the F1 competition because the MGU-H parts are excluded from the new regulations.

Under the new rules of power unit, it means that all teams will return to the same starting line. This is undoubtedly good news for the new Audi. Otherwise, if F1 is added before 2026, the power unit that has been used for two or three years will be equivalent to "invalid" in the 2026 season. From the perspective of time cost and money cost, it is obviously not in line with the actual situation. Then under the new rules, Audi and other teams set off at the same starting line.

In the final analysis, "electrification, environmental protection and sustainability" is still the core of Audi’s entry into F1, which is also where the new regulations in 2026 are in line with the strategic objectives of Audi Group. From the company level, audi ag has been emphasizing electrification and sustainable strategy in recent years. In March 2021, Volkswagen released the "ACCELERATE strategy", one of which was to accelerate the electrification transformation.

As for 100% sustainable fuel, it has always been the development goal of Volkswagen Group. The goal of German automobile brands is to achieve carbon neutrality in 2050.

Thus, from the strategic goal, the new F1 power unit regulations in 2026 are in line with the efforts of Audi and Volkswagen Group. This can partly explain why Audi chose to enter F1 in 2026.

Audi entered F1 for what?

Audi or Volkswagen has long been expected to enter the F1 track.

The reason lies in Audi’s accumulation in motor racing. Fans who are familiar with Audi brand or motorsport must know that Audi’s important DNA is motorsport spirit, and this brand has a history of 100 years. German brands have appeared in world-famous automobile races, and have achieved brilliant results in many races, but they have not appeared in F1 at the top of the pyramid in the form of motorcades.

Audi’s last and most important piece of racing puzzle will finally be put together in 2026. With the addition of Audi, F1 has added more attractions and topics. For Audi, there have been many opportunities to join F1, but why did it not enter until now? The reasons behind it are worth exploring. In my opinion, there are four main reasons.

First, the rising value of F1 events. After the free media group took over, the income and attention of F1 events increased greatly. According to the 2023 financial report of Free Media Group, the total revenue of F1 in 2023 was $3.222 billion, a year-on-year increase of 25%, and the operating profit also increased from $239 million to $392 million, a year-on-year increase of 64%.

The rising revenue of F1 events means that the penetration of motor racing is deepening to some extent. Then Audi, whose brand DNA is motorsport, has no reason not to join in today’s F1 race. With its years of experience and technical accumulation in motor racing, Audi’s journey in F1 may bring surprises to fans.

Secondly, it is the brand strategy of F1 and Audi. As mentioned above, Audi has accelerated the transformation of electrification. Under the application of the new rules, Audi can transfer the technology of hybrid power unit to the commercial models in the future through the practice in F1. It is foreseeable that electric vehicles will become the mainstream of the automobile market in the near future, so the technology and experience acquired by Audi in F1 will enhance Audi’s competitiveness in the wave of electrification.

In addition, it is Audi’s strategy of deepening youth and digitalization, which is also what F1 has been doing in recent years. The documentary "Drive to Survive" co-produced by F1 and Netflix created many highlights and topics for this event on streaming media, and successfully attracted a large number of new fans. A considerable part of these fans are young audiences, and Audi is also a car brand that emphasizes youthfulness. For Audi, this young audience may be one of the potential consumers of Audi’s target. Therefore, Audi’s brand strategy is consistent with the audience of F1 events today, which is also an important factor.

The third point is that both F1 and Audi are eyeing the China and American markets. China is Audi’s largest market in the world, accounting for 38.37% of its sales in 2023. China’s first F1 driver, Guanyu Zhou, played for Sauber, which cooperated with Audi. To some extent, this has promoted the development of motor racing in China. However, it is still unknown whether Guanyu Zhou will continue to play for the team in 2026. But what is certain is that Audi wants to continue to increase its market share in China, and Guanyu Zhou is their best choice.

As for the American market, it is also an important target of Audi’s efforts. In the American market in 2023, Audi sold 228,000 new cars, a year-on-year increase of 22%. At the same time, the United States is also a key market for F1. In the F1 race of the 2024 season, the United States occupied three sub-stations. This is enough to show the importance of the American market to F1. In other words, Audi can join hands with F1 to enhance its influence in the American market.

Finally, the key factor is that domenicali, the chairman and CEO of F1, once worked in Audi Group. In the process of Audi’s decision to enter F1, the "lobbying" role played by Italians was not ruled out. Domenicali, who has been at the helm of F1 since January 2021, once said that he would like to see more new manufacturers join F1.

In my opinion, rather than saying that Audi wants to join F1, F1 also wants Audi to join-several world-renowned automobile brands compete for the championship in F1, which will inevitably make the attention of the event by going up one flight of stairs, enhance the attention and correspondingly increase the income of the event. Therefore, the ultimate beneficiaries of Audi’s participation in F1 may be F1 events and the 10 teams in the paddock.

After all, everyone is good, which is really good.

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Original title: "Audi joined F1, who climbed who? | Sports Events

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