Electric car racing gets more juice in bid for exposure
Is it time to plug into electric car racing?
The nascent sports segment has competed mainly off the radar, but with major investments from automakers, the addition of racing royalty like Rahal, Andretti and Penske, and investments from sponsors eager to project socially responsible images, electric racing is beginning to turn heads.
This month, global technology company ABB went all in, signing a seven-year deal to title sponsor the Formula E electric racing series. The deal has been reported as worth slightly more than $100 million total, or about $15 million annually.
“The auto industry is going electric; it is electric,” Sam Piccione III, chief revenue officer of Formula E, said from Doha, Qatar, this month as he prepared to roll out another deal, an extension with Qatar Airways. “We’ve been fortunate with the curve of where the industry is going. We are the solution, and that’s why we’ve grown.”
Automakers are driving the growth by investing heavily into electric vehicle development amid tighter fossil-fuel emission regulations and newfound competition from the likes of Tesla Motors. At this month’s North American International Auto Show in Detroit, Ford announced it was doubling its investment in electric vehicle development to $11 billion. That amount is among the $90 billion collective global investment in electric vehicle development in recent years by manufacturers, according to Reuters.
While electric vehicles still only make up a tiny sliver of vehicle sales globally, their market share is growing. International Energy Agency data showed that electric vehicle sales grew by 60 percent in 2016 but represented just 0.2 percent of the total number of passenger vehicles on the road globally.
“We have, and will continue to use motorsports to advance and enhance our road vehicles,” Mark Rushbrook, global motorsports director for Ford Performance, said in a prepared statement to SportsBusiness Journal. “Electrification of the powertrain is no different than what we have done with EcoBoost, engine design and development, aerodynamics, lightweighting, vehicle dynamics, tires, etc.”
Big names and big plans
Looking for a global motorsports series to expand into last year, open-wheel racing legend Bobby Rahal didn’t turn to the glitzy Formula One but rather a new, little-known entity called the Jaguar I-Pace eTrophy Series.
The IndyCar and sports car team co-owner wanted to find a new series that could give his sponsors a global marketing platform. But rather than turn to a historically pedigreed series, Rahal in October announced that he would join the nascent eTrophy series, which starting in 2019 will serve as a support series of Formula E.
Rahal joined fellow IndyCar team owner Michael Andretti in making the investment in electric car racing. Andretti is owner of MS&AD Andretti in Formula E’s premier series. Other Formula E team owners include British business mogul Richard Branson and Jay Penske, son of racing legend Roger Penske.
On top of Formula E and the eTrophy Series, American series Red Bull Global Rallycross, which airs its races on NBC’s broadcast network, plans to introduce an electric class starting this season.
Colin Dyne, chief executive of Global Rallycross, said that executives from Volkswagen brought the idea to him as VW looked at introducing an electric rally car. GRC has yet to unveil specifics of its electric class, but Dyne said the series is talking to multiple manufacturers about joining it.
“The key thing with the electric is showcasing what an electric car can do in this format and utilizing a car that looks like what you can buy in the showroom,” Dyne said. “I think it’ll be a natural thing for the manufacturers to start investing in electric racing based on the amount of money they’re investing in electric vehicles. If it’s not today, it’ll be tomorrow.”
Formula E leads the way
Four-year-old Formula E has leveraged its position as a clean alternative to traditional combustion-engine racing into landing races in some of the most prestigious cities in the world, including Brooklyn, Paris and Rome. The series features cars that emit more of a high-pitched squeal than a loud rumble, leading to less noise concerns from neighbors and race fans who are attending with children. Formula E’s races take no more than an hour to run and are held on street circuits that open back up to traffic within hours of the race. This season, which began in December 2017 and runs to this July, features 12 races across five continents.
New title sponsor ABB, which is based in Switzerland but has offices throughout the world including an Americas headquarters in North Carolina, has four divisions including one focused on electric products and e-mobility. The publicly traded company maintains 6,500 electric vehicle charging stations worldwide, across 50 countries.
Saswato Das, ABB’s head of external communications, declined to say how much of ABB’s marketing budget is devoted to Formula E but said while it’s significant, ABB “didn’t bet the farm.”
ABB, which worked in-house on the deal, is looking to grow brand awareness among business decision-makers. It will host customers at events, where it will have a large presence at the Allianz E-Village. At its first race as title sponsor, ABB showed off a video of its YuMi robot — one of its other main products — conducting an orchestra. Das said ABB also hopes to integrate its electric charging infrastructure into Formula E competition, and is hiring a driver to serve as a brand ambassador. Much of ABB’s marketing will come on digital and social media.
“We believe, like Formula E, that the future of transportation is electric and we are one of the largest proprietors of electric infrastructure in the world,” Das said. “We are big in electrification, e-charging, and Formula E of course believes in electric cars — so it made us natural partners.”
The ABB deal caps an increasingly impressive run for Formula E, but the series still has a way to go before achieving mainstream metrics. The series said it averaged about 20,000 fans a race last season. For Formula E’s second race of this season in Marrakesh, Morocco, Fox Sports 1 pulled a 0.06 rating and 65,000 viewers in the U.S. for its tape-delayed airing. FS1 airs the majority of races, though Fox this season will air one of the races in Brooklyn, while FS1 will air races in Mexico City and Zurich.
Formula E’s Piccione, a former longtime executive with AEG who is based in London, said that revenue has grown fourfold in the past two years and is exceeding projections. Still, the series is not yet profitable, according to The Drum.
The series is working with several agencies on a nonexclusive basis to find sponsorship, including CSM Sport & Entertainment for North America. Piccione said a goal is to find more consumer-facing brands, and to find more local sponsorship for events. It typically costs mid-seven figures annually to serve as primary sponsor of a team in Formula E, according to sources, while it costs in the low seven figures to serve as an associate sponsor.
Formula E plans to quadruple its marketing budget over the next several years and has been eyeing a second race in the U.S. in cities including Chicago or San Francisco. The series is implementing an influencer strategy to help boost awareness of race weekends, underscored by Orlando Bloom showing up to this month’s race in Morocco.
Regardless of the strategy, there’s nothing like a title sponsorship to get more people to take notice.
“This gives us an immense amount of credibility — when you look at a nine-figure deal, seven years minimum, given how other motorsports are doing out there, it’s unheard of, unprecedented, it’s never been done in the last few years,” Piccione said. “Then you have a growth property like Formula E which is making headlines every day, it’s making believers out of a lot of people.”