Why BMW and Audi have pulled the plug on Formula E

Formula E has been dealt a hammer blow just as it's about to celebrate its new-found FIA World Championship status. Two premium automotive manufacturers that are recognised the world over, ones which are aggressively pushing electric road cars, will both exit stage left. The all-electric championship is no longer the electric championship that's right for them.

Individually, Audi and then BMW's decision to quit FE at the close of the forthcoming 2020-21 season are seismic. But together - the official announcements coming in two days of one another - it's inflicted a far bigger hit. Not a fatal one, but the championship has been knocked heavily.

In the inaugural FE season in 2014-15, you'd have been required to write a cheque for around £8million to cover costs of running your team and to be competitive. At a pinch, £10m. The best part of six years later, it'll take a cash withdrawal four times the size. That's a rather steep escalation.

But surely, when it comes to doing the accounts, for major players such as BMW or Audi, a £40m expenditure doesn't even make the first page of the accounts sheet? Apparently, it does register high up - as one leading team principal tells Autosport - such is the way budgets for research and development among other things are broken down. Suddenly, the throwaway phrase that FE is a drop in the ocean for a manufacturer doesn't ring quite so true.

As the world recovers from financially ruinous shutdowns resulting from the global health crisis, micro and macro cutbacks have to be made. But, with the economic legacy of the pandemic likely to linger far longer than the temporary closure of the high street, pre-emptive prudence is simple to understand. This has played a factor in Audi and BMW's decision to head for the door.

Ahead of the Audi news, and indeed aware it was inbound, FE chief championship officer Alberto Longo said: "We have a kind of waiting list for people - teams and manufacturers - who are basically calling us on a daily basis to jump into the championship. If, unfortunately, some manufacturer decided to leave, we will replace them soon." That might well have been true 12 months ago, but the pandemic has likely slowed the rate at which the phone is ringing.

Noise concerning Audi's departure had been circling and, on the Monday of the pre-season test at the Circuit Ricardo Tormo in Valencia, it broke into the mainstream. Given the rumours, there was time to accept it. And, as a sweetener to offset the bitter pill, it's paving the way for Audi to return to topflight sportscar competition and chase a 14th Le Mans 24 Hours victory.

PLUS: The logic behind Audi's surprise change of course

But amid the excitement, it overshadowed that, although Audi's exit was logical enough, the manufacturer hadn't been the prime candidate to bid farewell to FE. If it could go, what about the three other marques whose future in the series had seemed less secure?

BMW was one of those candidates with its Andretti-run squad. With Audi in the limelight a little further down the pitlane, the Bavarian departure was more surprising on the night. Not even the race team knew until the official line went public. It hadn't been immediately on the radar. And rather than be able to take comfort in a replacement World Endurance Championship programme, BMW ripped the plaster clean off.

There are obvious contrasts between what FE offers and what the road-car market is tilting towards. Rapid charging of up to 600kW is slated for the Gen3 regulations, which come into play for the 2022-23 season. But it's not here now

The official communication didn't feature a quote from a high-up, but it did include some weighty language in the justification for FE no longer meeting BMW's needs. "When it comes to the development of e-drivetrains," the press release read, "BMW Group has essentially exhausted the opportunities for this form of technology transfer in the competitive environment of Formula E."

Read that again: "Exhausted the opportunities". That's not the usual convoluted corporate speak. That's a direct swipe.

This is where the worry is to be found. It's all well and good to say manufacturers come and go in motorsport, which is true - they do. And it's also fine to blame it on the financial uncertainty that has resulted from the pandemic. But the worry for FE is that BMW has called out the championship's very reason for existing.

Relevancy is the buzz word of the times. While the debate with Formula 1 can swing both ways, FE is inherently road relevant. It exists to meet the needs of the automotive market. It's the founding principal. The championship races in city centres to showcase electric vehicle technology in heavily congested and populated regions.

That's the mission statement. That's why after the havoc wreaked on the 2019-20 calendar by COVID, FE fought to return to Berlin and didn't sign off (although it was close) on switching to purpose-built tracks such as Silverstone or Valencia. FE is a competitive and exciting billboard that creates spectacular racing in metropolitan environments.

With the United Kingdom finally committing to a 2030 date for its ban on the sale of petrol and diesel-fuelled road cars, FE looked set to go from boom to boom. It was at the maximum 12-team and 24-car capacity already. Should other European nations adopt the same prohibitive legislation, a realistic future for FE was (and likely remains) convergence with F1 - first by sharing race meetings, which may precede a potential merger.

The common quip about hydrogen is that 'it's the fuel of tomorrow but will always remain the fuel of tomorrow' due to the expense and inefficiency of storage. Although Porsche has invested heavily in research into synthetic fuels, national policy is increasingly rallying around the merits of batteries and inverters. That should have marked a major boon in FE's road relevancy quest. But it's not enough for BMW, which, again, has "exhausted the opportunities" that FE provides.

There are obvious contrasts between what FE offers and what the road-car market is tilting towards. Rapid charging of up to 600kW is slated for the Gen3 regulations, which come into play for the 2022-23 season. But it's not here now.

The other fascinating difference also involves elements that are currently fundamental to FE. The likely scenario for EVs on the road car side is a common powertrain that's shared between manufacturers. Either development costs are split, or one marque sorts it and others buy it off the shelf. So, in order to carve out an identity, it leaves it to car designers to drape the standard technology in distinctive bodywork so that one model can be told apart from the next. The coachbuilding of the early 20th century is set for a renaissance.

This model is the exact opposite of FE. The regulations keep the bodywork spec - with the liveries converging around an increasingly small colour palette - and make the powertrains the key area of difference. It works for now, but as the automotive world moves closer to the aforementioned model, it distances itself ever more from FE.

Speaking to Autosport, former Williams, Brabham, Benetton, Sauber and Arrows F1 designer Sergio Rinland says: "You can't have the battery of a Formula E car, the same cell, and use it in a road car, because there's a different chemistry. It's so expensive for racing, because all the battery companies are putting in hell of a lot of money to improve energy density, not power density.

"What you need in racing is power, so it's a different chemistry. It's a different kind of battery. When you want to develop a battery for racing, it costs you a fortune." The transfer of technology that's seemingly inherent to FE has been called out.

What needs to be done is noted by Mercedes motorsport boss Toto Wolff, who has incidentally reaffirmed the marque's commitment to FE. He tells Autosport: "FE is in a strong position in its niche and can definitely grow from its niche. We remain committed as long as the framework for future regulations, financial regulations, and technical regulations remains attractive for Mercedes.

"[Formula E and the teams] need to speed up the discussion around a cost cap to make it financially more sustainable. We need to discuss revenue distribution and we need to discuss the stability of regulations going forward. All this is on the table and important for all of us."

Cost caps and revenue distribution are indeed on the table for the Gen3 rules. Both topics are familiar talk from grand prix racing, so little wonder it's been picked up by the guiding hand of the pre-eminent F1 team of the past six years.

"There's always a little bit of a wake-up call for a race series. There is always upsides in moments like this. These situations are there to improve the series and improve the show and the entertainment factor" Toto Wolff

The fact Audi is going to field an all-electric car in the 2022 Dakar Rally in lieu of its FE programme should also raise eyebrows. It wants to capitalise on the ever-growing sales of SUVs with a motorsport attack, but it's not chosen Extreme E as the arena in which to do it. The all-electric off-road racing championship, created by FE co-founder Alejandro Agag, launches in 2021. Like FE, the XE car - the ODYSSEY 21 - is constructed by Spark Racing Technology. The powertrain is essentially two FE cars bolted together. Perhaps Audi, like BMW, is also questioning the relevancy of the FE package, which is why it's decided to go elsewhere.

Or is there another factor, one that's simpler: is FE's reach not big enough? A cursory glance shows the championship's official account has 236,000 followers on Twitter and 589,000 YouTube subscribers. By way of comparison, F1 has 5million and 4.64m respectively. The World Rally Championship clocks 338,000 and 614,000. For FE, has the growth in audience not been rapid enough for Audi and BMW to justify its £40m spending?

Another question that must now be asked is: 'Who, if anyone, is next?' Audi insists its decision to quit FE is on its own terms and not an overall directive from its Volkswagen Group owner. But it has become harder to accept the move was in isolation after VW canned its entire factory motorsport line-up the following day. The fallout from the 'dieselgate' emissions scandal hangs heavy in the air.

Porsche operates in FE as a completely separate team to sister company Audi. There's no shared powertrains or data going on behind the scenes. And, as the LMP1 era proved, both teams can compete against one another in the same category. It's only about to embark on its second season in FE, and so an early exit still looks unlikely. But perhaps not quite as unlikely as it did a week ago.

Jaguar Racing is another one. Autosport has asked on several occasions about its future in the series, coming after the I-Pace eTrophy was mothballed following only two seasons of its three-year deal to support certain FE events. The response is an emphatic commitment, but as the Financial Times will tell you and as news of a cut of 4500 jobs alludes to, Jaguar Land Rover isn't in rude economic health. It only takes a move at a boardroom level.

What about Nissan e.dams, and what about DS? There's little attention drawn by the French manufacturer to its commanding FE success of recent years. Ordinarily, that would call the marketing into question. After recent events, does it speak of something bigger? Let's hope not, however it all allows room for speculation that might not have been there a few months ago.

After Wolff's declaration of Mercedes' assurance to FE and with Mahindra Racing so far the only team to sign on for the Gen3 regulations and promise another six years in the championship, there's only a tangible commitment from two manufacturers. That's not to say Audi and BMW's exit is laying the groundwork for an exodus, far from it, but it allows this type of scepticism to build.

The departure of two blue-chip names from the FE paddock has not suddenly plunged the championship into some kind of doomsday scenario. As ever in these situations, it presents series organisers with a chance to evolve the concept to meet the needs of the participants and to come back stronger.

Wolff continues: "There's always a little bit of a wake-up call for a race series. There is always upsides in moments like this. These situations are there to improve the series and improve the show and the entertainment factor.

"Formula E has its place. It stands for electric mobility, it stands for urban entertainment, it has an event character with a single-day format. And it has developed as it should have developed as a racing start-up.

"One must not forget that the series is only a few years old, compared to 70 years of F1. And I think we need to give it time to develop. Having said that, let's analyse why BMW and Audi have left; let's see this as something that we need to learn from and improve from. There's an opportunity for the series to learn something from the situation and improve."

He's on the money. There is optimism to be found from the events of the past week, which have incidentally completely overshadowed three days of testing that has revealed a field more competitive than ever seen before in FE.

"One must not forget that the series is only a few years old, compared to 70 years of F1. Having said that, let's analyse why BMW and Audi have left; let's see this as something that we need to learn from and improve from" Toto Wolff

While that may lead to one of, if not the most, entertaining seasons in FE's short history, as the drama unfolds on track the eye must not be taken off the future. In its response to the coronavirus outbreak and a willingness to change homologation regulations and scrap the Gen2 EVO facelift, FE has proved time again that it's proactive and wants to operate on the front foot.

Whether it's in the form of finalising a cost cap to keep the spending in check, or it needs to go further and rethink the relevancy of the technology, FE has to be bold in its next steps. The good news is, as we've seen from the introduction of fanboost and attack mode (regardless of whether you like those features), the use of a packed one-day format and so on, this is a championship that's more than comfortable in being daring.

Audi and BMW's exit doesn't make for good headlines or for good coverage from the critics on social media, who have been presented with an easy target. But it does present FE with an opportunity, and one that it must seize now to ensure no other manufacturers come away having "exhausted" the championship's potential.