How Formula 1’s Audi coup has been realised

Formula 1 has watched its TV and trackside audiences explode, revenues rocket and truly cracked America off the back of its Liberty Media buyout and Netflix-led popularity boom. But since the takeover and Drive to Survive first airing on 8 March 2019, the series hasn’t charmed the automotive market anything like as emphatically. In the same period, Honda even pulled out as an engine supplier and the arrival of the Alpine and Aston Martin names were rebrands of existing outfits only.

That’s now changing courtesy of the second-biggest car conglomerate in the business: the Volkswagen Group. One of the poorer kept F1 secrets has now been confirmed, with Audi leapfrogging sister marque Porsche to reveal its grand prix commitment for 2026 and beyond.

After talks with McLaren came to nothing plus evaluations of Williams and Aston Martin, the four rings will almost certainly hop into bed with Sauber, having ruled out establishing its own race team. So, the current Alfa Romeo stickers donning the Swiss-built machines will soon make way (another branding exercise). But for now, the official news, announced today in a press conference at Spa, is that Audi is gearing up to build its own powertrain in a major coup for the championship. The Sauber alliance press release will follow soon enough - before the end of the year, we're told.

The 13-time Le Mans 24 Hours-winning manufacturer arrives after an FIA-led delay on the precise wording and specification of the 2026 engine regulations. But with the World Motor Sport Council finally granting its seal of approval to the legislation earlier this month, the Ingolstadt boardroom gave the greenlight. And with Porsche poised to partner Red Bull, the entry of the two German giants is arguably a greater measure of F1’s current strength than even the inbound Las Vegas race on the famed Strip.

“Motorsport is an integral part of Audi’s DNA,” says Markus Duesmann, chair of the Audi board. “Formula 1 is both a global stage for our brand and a highly challenging development laboratory. The combination of high performance and competition is always a driver of innovation and technology transfer in our industry. With the new rules, now is the right time for us to get involved. After all, Formula 1 and Audi both pursue clear sustainability goals.”

Audi had its F1 interest piqued in 2015 when it conducted a study into the viability of an entry. That appraisal was led by Stefano Domenicali no less, now the championship’s CEO - that link certainly why, seven years later, the deal has been completed so quickly.

Audi's board chairman Markus Duesmann and head of technical development Oliver Hoffmann joined F1 boss Stefano Domenicali and FIA president Mohammed bin Sulayem to showcase the new Audi Sport F1 concept car

Photo by: Sam Bloxham / Motorsport Images

In September 2017, Lutz Meschke, Porsche’s deputy chairman of the executive board, met with F1 bosses at Monza as the marque evaluated an entry at least as an engine supplier. But already, and in strict secret, former Porsche motorsport boss Fritz Enzinger had put a team of 40 engineers to work. They had been tasked with taking the 919 Hybrid World Endurance challenger’s two-litre turbocharged V4 engine and exhaust-driven ERS hybrid system and adapting it to the 1600cc V6 specification mandated by F1.

This was in response to VW’s presence when F1 was negotiating a powertrain configuration that would come into effect for 2021. The behemoth pushed for simpler, more cost-effective regulations by scrapping the MGU-H (Motor Generator Unit – Heat). But these changes would not be adopted at the time.

VW came away reporting that existing manufacturers were unwilling to budge, making it unrealistic for a newcomer to be successful. F1 suggested that VW had pushed for wholly new regulations but, even then, would not commit to an entry.

The newly signed-off rules eliminates the costly and complicated MGU-H as desired, while electrical power from the retained MGU-K (Kinetic) rises from 120 to 350kW - 50% of the hybrid engine’s total output

Either way, the skunkworks engineering team was disbanded. While the axed LMP2000 sportscar prototype’s V10 lived on in the Carrera GT road car, the “high-efficiency engine” - as per the unimaginative internal codename for a creation that had progressed to the test bench - was mothballed.

At this time, the VW Group had to pay over £26bn in federal fines around the world in response to ‘Dieselgate’. Where motorsport was concerned, the repercussions left its subsidiaries to withdraw from the top classes of the WEC, WRC, DTM and World Rallycross most notably.

The trail, at least in the public domain, went cold until last season’s Austrian GP in July. There, as it had in relation to the 2014 and 2021 rules packages, the VW Group contributed to meetings with F1 and the FIA to formulate the new-for-2026 engine regulations. Audi chairman and overall group R&D head Markus Duesmann plus Porsche CEO Oliver Blume were the attendees.

They had their prerequisites for the two marques to join F1. And those criteria have been satisfied by the newly signed-off rules. The framework eliminates the costly and complicated MGU-H as desired, while electrical power from the retained MGU-K (Kinetic) rises from 120 to 350kW - 50% of the hybrid engine’s total output. These arrive in tandem with F1 moving from its current 10% to fully sustainable fuel plus introducing a power unit cost cap.

Oliver Hoffmann, Audi's technical boss, reckons: “In view of the major technological leaps that the series is making towards sustainability in 2026, we can speak of a new Formula 1. Formula 1 is transforming, and Audi wants to actively support this journey. A close link between our Formula 1 project and Audi AG’s technical development department will enable synergies.”

Hoffmann says the new-look Formula 1's embrace of sustainability was key in convincing Audi's board

Photo by: Sam Bloxham / Motorsport Images

For Audi, it will come to face an annual limit of $130m. But as a new manufacturer, it will be allowed an extra $10m for its first two seasons and $5m in the third to ensure it gets up to speed. This comes alongside the shake-up of the rules, which will in theory disrupt the status quo and should afford Audi more of a shot of fighting towards the front.

Less complex? Less expensive? Better environmental credentials? Greater chance of competing with the incumbents? Tick. Tick. Tick and tick.

Those pros all help sell the dream to the board, but it’s not why Audi has entered F1. The recently ousted VW Group CEO Herbert Diess was rather candid about the reasons behind the entry. Believing that the ‘win on Sunday, sell on Monday’ adage is still entirely applicable, Audi wants to beat premium German rivals Daimler and BMW at the showrooms.

The aim is to make hay while the sun shines and pounce on the success of Drive to Survive, then the box-office receipts of the forthcoming movie projects over the coming years, which have grown and will continue to grow the F1 audience globally but has also specifically led to a swelling viewership in Asia and America.

As Diess said when addressing residents of Wolfsburg, the home city of the VW Group, earlier this year: “Audi also transfers €4-5billion a year to Wolfsburg, and it will transfer more with Formula 1 than without. Then you simply run out of arguments. You can say, ‘But I don’t believe in Formula 1’, but there are good arguments that say Formula 1 will grow, even in the future. Why should you restrict them there if they then transfer more money?”

Meanwhile, Porsche is poised to formalise its investment in Red Bull Powertrains, which is independently ready to put a 2026-spec engine on the dyno in Milton Keynes. As such, it’s expected that Audi will dust off the 1.6-litre turbo V6 mule, with which its sportscar-making sister toyed in 2017. This will be engineered and constructed at Audi’s Neuburg facility and will be proudly German.

However, Audi’s route to running a race team was much less oven-ready than its engine. The path of least resistance was always likely to be a takeover of an existing franchise, given the scepticism that the current 10 squads have shown towards Michael Andretti entering a wholly new team. The buzzword they’ve used is “dilution” since they fear that an extra entry would entail dividing their prize pot.

Audi’s route to running an F1 team was much less oven-ready than its engine - but a Sauber tie-up is expected to be announced imminently

Photo by: Audi Communications Motorsport

Reports emerged late last year that Audi was on the brink of buying the McLaren Group - the troubled Automotive arm plus Racing division - as its best bet at gaining an F1 berth. A sale would likely have caused the McLaren name to disappear from grand prix racing altogether, but those advanced negotiations with the Bahrain sovereign wealth fund that owns the Woking set-up fell apart.

McLaren Racing is now also much more stable after being put through the financial wringer during the pandemic - it took out loans, completed a sale-leaseback transaction on its Technology Centre, and sought £185million of investment from MSP Sports Capital. Speaking ahead of the inaugural Miami GP earlier, boss Zak Brown made it clear there was no possibility of a sale.

“Our shareholders are very committed to McLaren,” he said. “We did have conversations with Audi, and we’re not for sale. We’re very committed to our future and we’re doing really well on the track.”

Likewise, Williams was off the table. That’s despite the wealth of ex-VW motorsport figureheads - team principal Jost Capito, technical director Francois-Xavier Demaison and sporting director Sven Smeets all worked on the dominant Polo WRC programme - that are central to its new leadership structure since the Dorilton Capital acquisition in 2020.

Before long, it’s inevitable talk will turn to the sustainability of Porsche (set for a 10-year deal with Red Bull) and Audi competing against one another. They have done so before in LMP1 and Formula E, but the overlap was short-lived in either case

The private investment firm recognises the current success that F1 is enjoying and wants to maximise that value. It’s why Brown predicts that within five years, a team takeover will nudge $1billion. Similarly, Andretti’s rumoured bid of $350m for Sauber late last year was declined because current conditions allow sellers to almost name their price.

Despite the eyewatering sums, Audi still reckons F1 represents good value. For what is believed to be a smaller share of the company compared to what Andretti was asking for, the manufacturer has pressed ahead with a deal with Sauber’s owner Finn Rausing. As part of the collaboration, it has been rumoured that Rausing insisted on the continued existence of the Sauber Group at the Hinwil site in Switzerland, the preservation of jobs and demanded a further $250m as a contribution to be sure the team was in safe hands.

Audi will then continue to write cheques to further develop Sauber as a factory outfit, not unlike how BMW aided the concern between 2006 and 2009. Autosport understands the plan is for the F1 team to keep on building the chassis in Hinwil, where one of the sport’s most advanced windtunnels is still located.

Audi will invest in Sauber as a factory outfit, as BMW did between 2006 and 2009

Photo by: Sutton Images

Before long, it’s inevitable talk will turn to the sustainability of Porsche (set for a 10-year deal with Red Bull) and Audi competing against one another. They have done so before in LMP1 and Formula E, but the overlap was short-lived in either case. However, given the amount being spent - even if Duesmann reckons "we won't need to [make money]" - there’s an expectation to stick around to see some of that so-called ‘return on investment’.

Until then, there’s still three and a half years of preparation to be done. The process of recruiting and redeveloping the Neuburg plant to F1 standard is underway. Audi will then attempt to hit the ground running on its return to grand prix racing in 2026 - 90 years after pre-war superstar Bernd Rosemeyer guided the Auto Union (Audi precursor) Type C to the European championship spoils.

Audi will attempt to hit the ground running on its return to grand prix racing in 2026

Photo by: Audi Communications Motorsport