Formula E: The idea is simply electric

by Jan 8, 2014

Formula E, an all-electric, zero-emission motor-racing world championship, has been making big waves in the motorsport world recently. Launched in 2012 in the face of widespread scepticism with an initial fund of 100 million euros, the series has been steadily gaining in credibility and has managed to bag some high profile partners including such storied motor-racing names as McLaren, Williams, Renault and Michelin.

Set to flag off in September 2014, the new series already boasts a full grid of teams, including India’s very own Mahindra Racing, and a healthy calendar of ten races. We spoke to Alejandro Agag, CEO of Formula E Holdings, about this potentially revolutionary motor-racing championship.

Tell me about how the Formula E idea was conceived. I know you’ve worked hard since it was announced to make it a reality but the concept was basically the FIA’s idea correct?

Yes. It’s an FIA initiative that looks to create a new kind of racing, a sustainable kind of racing which is compatible with all the other FIA championships, is complementary and it really plays a role for the development of clean mobility technologies, particularly electric and then other technologies will also be possible in the future.

Formula E

"We immediately realised the potential that green racing has for partners and sponsors," said Agag.

What makes this the right time to launch this championship? Because there was the Formula Zero project a few years ago which didn’t quite take off, so what makes this the appropriate time now to have an electric series?

We think two things make it the right time. First of all, the concern around the world in terms of sustainability, climate change and ecological problems is growing, is bigger than ever now. People are starting to realise that we have to act and we have to act soon in order to avoid very, very big problems in the future for the world. So that’s one thing.

The other one is technology. The technology is now ready to be able to provide a good show. Of course, we are the beginning, we are the first and we will improve dramatically in the next years and we will see a very big improvement in the performance of electric racing cars but now the technology allows us to start racing. So those two things combined are what make this moment the right moment to start this championship.

You’ve mentioned that your target audience is not necessarily the diehard petrolheads but it’s more the next generation, the kids growing up today. One of the aims of the championship is that when these kids buy their first car, it’s an electric car. Now obviously those same kids are also going to be watching Formula One, so what does Formula E have that is ‘cooler’ than Formula One, for example?

We don’t compare ourselves with Formula One. We love Formula One. Formula One is, I think, the best championship really in the world of racing. But Formula E is different. We want to position it in a different way. So it’s not better or worse, it’s just different. It’s like comparing skiing and snowboarding. Snowboarding is different, it’s a different category. So there are some people who like skiing and some people who like snowboarding. So it would be a different positioning and we think it’s a positioning that may be attractive for a new kind of public – a new generation that is more digital, interactive. We will include a lot of different ways for fans to interact, to play and we think that is really what will make a difference.

Was it particularly difficult in the beginning to get it all rolling? You had to convince partners like Michelin to come onboard, you had to convince cities to close off their roads for one day. At that time the product wasn’t really there so...

Well, you know it was difficult in a way because we were new and people didn’t know what we were but it wasn’t so difficult. Because you know, there are a lot of pioneers around the world and I think everybody that is partnering with us, shares this characteristic of pioneering, of being there first, of trying and not being afraid to fail because in order to try to achieve a big thing, you need to take risks and always when you take risks there is the possibility to fail.

Now I’m sure that while setting up the venture, you must have been mindful of projects like A1GP which was also a winter championship but which failed after a few years. So how is the business model of Formula E different, how does it guarantee sustainability into the years ahead?

A1 was a good championship and a good concept. I think the problem was that it’s very, very difficult to compete with Formula One and I think the concept was too similar to the F1 concept and that was what made it not viable. We have a different concept, very, very different. So we think that there is a very strong possibility of success in terms of business, particularly based on partners and the sponsors because of the sustainability aspect. We think we have a unique offering that brings a special attraction for our championship.

Also, another very important point for us is cost control. We have a very tight cost control procedure. Teams have budget caps, the cars have a limited maximum price.

I was actually coming to cost control because I believe the operating costs for teams have been capped at $5 million, is that correct?

Well it’s 3 million euros so it will be a little under $5 million.

Right. But how do you go about policing that. Because if you look at the Formula One model for example, when there are manufacturers involved, they can use accounting tricks to hide costs and account for them as costs incurred as part of their road car operations. So it’s a tricky one to police isn’t it?

Yes. Basically there are two different budgets. One is the operating budget for the teams. So that’s the one that is capped at 3 million euros. Then the manufacturing costs, we cannot control. So if somebody decides to spend 100 million designing a fantastic car, that we cannot control.

But what we can do and what we have done, it’s a rule, by which that team will have to sell the car to another two teams at least at a maximum capped price of 350,000 euros. That basically avoids an arms race of expenditure and if someone does it, at least you will have three teams with the same car so the championship will at least be competitive.

Formula E

India is very much in consideration as a host for the race, said Agag. Formula E

You have some fairly interesting ideas to get fans involved and engaged with the concept. Could you elaborate on those a little bit?

We have very different ideas. There’s two that we are focussing more on. First, the social media push-to-pass. So fans will be able to vote for their favourite driver. We are still to exactly define how it will work. We are thinking if this is going to happen during the race or if it’s going to happen a whole week before the race and then the push-to-passes are announced just one minute before the start of the race on the starting grid. So we’re looking at how exactly to make that happen, to make it more exciting.

But fans will be directly involved in the result of the race through the social media push-to-pass. Push-to-pass means an extra amount of horsepower for ten seconds for one car so he can pass someone. The other one that we’re really working on is the online real-time video game. So we want fans to be able to play in the race. It will be a mobile-based game, very simple in terms of graphics but very let’s say connected to reality because the cars will be where they really are during the race and fans will have a shadow car that will be racing against them. So those things we think are important to give new ways of engagements to the fans in terms of interacting with the race.

But the fan-voted push-to-pass feature, some people have said it’s a bit too gimmicky, that it could unfairly skew the competitive order of the series. How do you respond to that?

I respond that they are right. I respond that it gives an advantage to certain drivers that have maybe more fans than others. It will also give an advantage to the drivers who work better on social media and that’s actually something we want to really promote. And it will be a non-decisive advantage because it will be just one push-to-pass, so probably that won’t determine the result of the race at the end but it may just change one position. Of course it may eventually, in an extreme case, help the second go to first but again it’s a trade-off between pure racing and interaction with the fans and we think that’s a good balance.

And I’m sure you get this question a lot, but what about the sound? I’ve seen the videos of the testing and it sounds like it’s got a high-pitched futuristic sound, but do you think that will be enough for motor-racing fans who generally go to a Formula One race, for example, for the sound?

You know, I love the sound of racing – Formula One, IndyCar – I love the loud sound but this is different. And again, sound is going to be I think one of our great assets. If we had a high sound, we probably couldn’t race in many of the cities where we have gotten the permission to race, in city centres. The lower sound gives us an advantage from that point of view. But on the other hand, it’s high enough – in the region of 80 decibels – so like a sports car or a motorcycle, that 20 of them racing at the same time will provide more than enough excitement to the fans that are watching right there.

But if you are one mile away, you won’t hear anything. If you’re at home, you can be peacefully at home and you won’t hear anything. So that, in terms of minimising the disruption in a city, it’s a big advantage. So I think it’s going to combine excitement with minimum disruption.

And also, it’s kind of a futuristic sound and as I said we want to position this championship differently and that’s one of the main assets.

You’ve got ten races in the first year. I believe you’re looking at adding two races every year following the first year.

Yes, that’s correct.

So what level will the calendar be capped at? Right now it’s 10 but what is the maximum number of races that you could have in a calendar?

I think the maximum number of races probably down the line will be around 18, between 18 and 20 but I think 18 is a good number.

And what cities are you looking at adding next. Is India in the pipeline possibly?

Yes, India is in the pipeline. We have a great partner in India which is the Mahindra Group. And together with them, we would like very much to bring a race to India. We have to look for the best location in India. As you know we race in city centers so traffic and other city center limitations have to be considered. But we are optimistic we will find somewhere spectacular to race in India together with Mahindra.

And we are looking at other cities. Probably Hong Kong will be in year two as we couldn’t put it in year one due to just some small track design details. We are looking at cities in North America, we are looking at more cities in Europe, we are looking at Australia, we are looking at Africa so, yeah, we have a number of venues that we are considering.

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