The Curious Case of Formula E

There are times when you see a business you like and admire succeed but wonder if the participants understand what they are getting involved in. The succession of major brands joining Formula E should be a sign of impending glory — and for Formula E it just might be. For the manufacturers, you must ask if they comprehend the challenges they are facing.

The past few months have been kind to this once side series. Successful racing in the streets of NY (ok, Brooklyn) has been followed up by a slew of announcements that cement its place in motorsports and the wider entertainment space.

The PR team should be applauded for the way they have handled things for getting plenty of coverage around the announcements of Mercedes and Porsche joining in the coming seasons.

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The Formula E paddock will soon have teams representing Renault, Jaguar, BMW, Mercedes, Audi, and Porsche — the last two may both be part of the same overall group but very much seen in the public eyes as different brands. That is a remarkable achievement when coupled with teams that have geographic appeal such as India (Team Mahindra) and USA (Andretti).

Perhaps, more importantly, is the course of action that the latest announcements have meant to other motoring series.

Porsche have determined that they shall follow their Audi counterparts and quit their traditional racing series. Porsche have left the World Endurance Championship (part of the wider Le Mans Series) to make way for the new series.

Audi, of course, made waves when they quit the WEC and Le Mans to focus on Formula E . Some of this is related to the parent company having significant issues with its Diesel emissions fines and being an exercise in repairing the damage done by revelations in the media of faking official test results.

With Mercedes set to leave DTM as well, we are seeing a real trend beginning to take shape — not least in the ability of the senior team at Formula E to convince these high-profile manufacturers that there is a real movement worth getting involved in. Mercedes are continuing their F1 involvement but quitting DTM is a serious move. It’s a home market championship and is of course effectively a stock car series with actual road cars, Formula E is clearly not the same. So what is going on?

Part of the change of pace must be related to the fact that more and more manufacturers are focussing their attention on the Electric Car market. The summer announcement that Volvo was to go all electric and hybrid within 2 years was just the start.

That was quickly followed by the announcement that France intended to ban petrol and diesel vehicles by 2040. Whilst typical of a sitting government to make bold pronouncements that other successive administrations would need to deliver, the news was ground-breaking and was swiftly followed by the statement that the UK intended to do the same.

Against this backdrop it is perhaps unsurprising that so many manufacturers have been getting involved with Formula E. They need to be demonstrating their credibility in the electric car market space and where better than the televised racing series?

There will be stories around the increased influence the teams can have on various components on the cars now the rules have been relaxed from where they were the first-time cars raced but as the manufacturers seek to reposition themselves as experts in E-cars we can expect more PR and marketing stunts to follow that demonstrate their new focus.

It is, however, a very old business model that is supporting this influx of manufacturers to Formula-E. It has been a long-held belief that motor racing is a good way to sell more cars.

This conventional belief is no doubt the true underpinning in the switch to Formula E. If racing has been so successful in selling cars in the past then the logic follows that E-Racing will sell more E-Cars? This type of group think is exactly why new entrants to this space have a real opportunity.

From the outside, it very much looks like the cabal of manufacturers is looking at new threats such as Tesla as a challenge because they are in the fully electric car business. Yet this would suggest that they haven’t fully comprehended what Tesla is doing.

Tesla isn’t building an electronic version of a car, its built an E-car and a new sales and distribution model. It hasn’t been bound by the same rules as the others. It started from scratch and has tried to re-imagine the car experience and design. At the same time, it has understood that the customer has yet to get to the point that we want a pod as imagined in the movies. So, whilst it looks like a regular car it’s not built to be like that.

Take a peek at the inside of a Tesla and compare it to the current crop of Lexus, Mercedes or BMW. The experience has been totally reimagined and the tiny, hard to navigate screens have disappeared, the bizarre grouping of buttons and knobs have vanished and a modern touch and voice enabled experience has replaced them.

Move to the distribution and sales model and you see another key difference. Tesla has borrowed from Amazon and put the customer first. They recognized where the customer was going and went there. In the UK you can wander through Westfield Mall and see their shop, step into the car and chat with the sales rep. You don’t need to drive 20miles out of town to the showroom.

Tesla has made a point of re-imagining the entire car food chain and distribution model found inefficiencies and then tackled them head on. In a world where smart phones and tablets are prevalent, why would they use old, difficult to use technology in their cars? If there are places where there is a naturally high footfall, why not show off your cars there rather than drag them out to you?

This is not to say Tesla has everything right, they don’t. Yet with the consumer changing so much in such a short space of time is conventional thinking really the right way to go at this point, or should the convention change?

Perhaps Tesla is looking at Formula E and thinking there is an opportunity to exploit, maybe that will show that the series has moved not only mainstream but also to the future. Either way, it will be interesting to watch as the championship continues to solidify itself in the sporting landscape and intriguing to see if the older manufacturers can rely on the tried and tested to fight back and maintain their market dominance.