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SBD Global/May 31, 2013/Franchises

Williams, Mercedes Sign Long-Term Engine Supply Deal Starting In 2014

The Williams F1 Team and Mercedes-Benz signed a long-term engine partnership beginning with the 2014 F1 World Championship season. Under the terms of the agreement, Williams will be supplied with a Mercedes-Benz Power Unit by Mercedes AMG High Performance Powertrains based in Brixworth, England. Williams will continue to manufacture its own transmission (Williams F1). In London, Kevin Eason reported "amid turmoil over the soaring cost of the futuristic new engines, teams are in deep negotiations to find suppliers who can hand over the complex power packs at the right cost." Renault is thought to want as much as £20M ($30.4M) "to supply a team for next season, more than double current rates." McLaren Team Principal Martin Whitmarsh, who is also chairman of the Formula One Teams' Association, "candidly admits that the teams have 'scored an own goal' by not capping costs immediately." It "is too late to pull back from the brink" with Ferrari, Mercedes and Renault thought to have spent as much as £100M ($152M) each on developing these engines. Whitmarsh said, "We missed an opportunity and the fact is the manufacturers have and are spending a lot of money developing these engines. They have got a lot of technical freedom and engineers will try to exploit that" (LONDON TIMES, 5/30).

TAKING CONTROL: REUTERS' Alan Baldwin wrote the announcement means the German manufacturer's engines "will power four of the 11 teams next season before McLaren enter a new partnership with Honda" from '15. Renault "will have at least three teams next season." Mercedes Exec Dir Toto Wolff "is also a Williams shareholder," although he has said that he will sell the stake. Mercedes "will be Williams' sixth change of engine partner in the space of a decade" (REUTERS, 5/30). In N.Y., Marietta Cauchi reported Renault "played down the importance of the news," saying that it is shortly to sign up a new F1 team. Renault has said that "it could supply up to five teams if necessary, though commercially that would be a stretch." Renault Sport F1 CEO Jean-Michel Jalinier said, "Three, or up to four, teams is the ideal for us so the departure of Williams normalizes the situation and makes things much clearer from our side." Representatives for Williams, Renault and Mercedes "all declined to comment on whether the package being offered by Mercedes was less costly than Renault’s price for the new hybrid engines," though analysts believe that Renault’s technology is more expensive (WALL STREET JOURNAL, 5/30).
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