The Investment Of The Formula E Team Is Not As Big As The Operational Costs Of The Formula One Team And It Supports The Electric Car Business

Jaguar Racing Team Formula E. (Wikimedia Commons/KAgamemnon)

JAKARTA - The Formula E electric car race, which is entering its seventh season this year, began to be held on February 26 and 27 in Saudi Arabia. Cited from the site fiaformulae.com, the 2020/2021 season race calendar only presents eight-race schedules.

After Saudi Arabia, the next race will be held in Rome, Italy on April 10. After that, there are Valencia, Spain (24 April), Monaco (8 May), Marrakesh, Morocco (22 May), and Santiago, Chile on 5 and 6 June. With a note, the schedule is still subject to change related to COVID-19.

This year, the race will be attended by 24 cars, 24 racers from 12 teams. So, how much will it cost to run a Formula E racing team?

According to Forbes, the Jaguar car manufacturer had to spend USD 11.7 million to run the race season in 2018. This is about 4 percent of the average cost to run a Formula One racing team, the 'older brother' of Formula E.

Therefore, many car manufacturers are interested in joining this race, such as Audi, BMW, Jaguar, Nissan, Mercedes, Porsche, Mahindra, and DS Automobiles.

Jaguar Racing Team Formula E. (Wikimedia Commons Matti Blume)

When it was launched in 2014, Formula E founder Alejandro Agag said it would have an operating budget limit of 2.5 million euros or approximately USD 3.3 million.

The difference is very big, compared to the Formula One team, for example with the Toro Rosso Team, which is called the closest comparison to Jaguar. The team, which is now called Scuderia AlphaTauri, spent USD 181.5 million for the 2018 racing season.

A huge gap in terms of operating budgets, because Jaguar's Formula E team costs only 6.4 percent of Toro Rosso's expenses.

Like many other Formula E teams, UK-based Jaguar Racing must file financial reports publicly available. However, Formula E teams often make turns because they tend not to have enough assets, staff, or income to meet reporting requirements. Instead, they only need to file summary financial reports that don't reveal how much it costs to run the team. Jaguar Racing is an exception as it reveals this and more.

As quoted by Forbes from the Sunday Express, in the year until the end of March 2019, Jaguar Racing's profit before tax turned 6.9 percent to just USD 0.7 million with revenues of USD 13.6 million. This was provided almost entirely by the team main company Jaguar Land Rover (JLR) and its contribution increased 5.5 percent from the previous year.

The financial report adds that, in relation to the championship prize money received, the company's revenue is presented after deducting the number of contracts attributable to drivers and their racing partners. They include technology giant Panasonic, aerospace components company GKN and heating system manufacturer Viessmann.

Jaguar Racing Team Formula E (Wikimedia Commons / Shelby Asistio)

Jaguar itself is one of the most prominent brands in its racing cars with logos on the rear wing, nose, and sides. The financial report says the JLR will aim to ensure sufficient funding for a racing program that will enable it to build teams and race cars capable of sustained success.

In addition, during the year, Jaguar Racing completed a short-term loan of USD 11.5 million from the JLR group of companies through a non-cash settlement, replacing the USD 43.7 million in assets and liabilities with JLR itself. Until, Jaguar Racing, which originally had a debt of USD 30.6 million had become only USD 1.2 million.

In addition to engineering this financial restructuring and providing most of the team's revenue, JLR covered its software development costs and carried out its research and development for the year to the end of March.

Formula E cars produce no emissions and make less noise which allows their races to take place in city centers such as Paris, Berlin, and New York. It shows off electric cars on the same roads that consumers use which are especially relevant to the JLR, as all its new cars will have electric options starting this year.

Jaguar joined Formula E in 2016. This Formula E racing event is a test vehicle for the development of their electric car engine, which has proven to be successful in the market, the best-selling Jaguar I-PACE which is in great demand.

"Formula E is at the heart of our global brand strategy, a real-world test of our steps towards electrification, has been a key element in the successful launch of the Jaguar I-PACE, our first all-electric Jaguar", said a Jaguar Racing Team spokesman at the time.

Indonesia plans to hold one of the Formula E racing series in the upcoming racing season in 2022. As a newcomer, Indonesia will accompany Paris, which will again hold the event next year, after being absent due to the COVID-19 pandemic this year.