FIA confirms that two engine manufacturers are in procedural breach of F1 cost cap

Formula One's governing body, the FIA has confirmed that all ten F1 teams have been found in compliance of the Financial Regulation, but it has also revealed that Honda and Alpine made procedural breaches with F1’s power unit manufacturer cost cap.

The FIA has confirmed that its Cost Cap Administration (CCA) has completed its review of the Reporting Documentation in respect of the Reporting Period that ended on 31 December 2023, submitted by each F1 Team that participated in the 2023 FIA Formula One World Championship and by each Power Unit (PU) Manufacturer registered to supply the new generation of PU that will be introduced from 2026.

2023 is the third year of implementation of the Financial Regulations for F1 Teams and the first year of implementation of the Financial Regulations for PU Manufacturers.

The report noted that "the review of the Reporting Documentation was a thorough and intensive process spanning five months with all F1 Teams and all PU Manufacturers giving their full support in providing the required information. The CCA notes that all F1 Teams and all PU Manufacturers acted at all times in a spirit of good faith and co-operation throughout the process."

The Paris-based governing body has noted that all ten F1 teams have been found in compliance with the financial rules.

As for the power unit manufacturers, the FIA confirmed that four manufacturers have been found in compliance for 2023. However, Alpine and Honda are in procedural breaches of the F1 cost cap.

The FIA confirmed in its report that "the CCA confirms that although Alpine Racing SAS and HRC have both been found to be in Procedural Breach, neither have exceeded the Cost Cap level. Both Alpine Racing SAS and HRC have acted at all times in good faith and are currently cooperating with the CCA to finalise the matter.

"Considering the nature of the breach, the complexities of the new Financial Regulations for PU Manufacturers and the challenges associated with their first year of implementation it is the CCA’s intention to propose to these two PU Manufacturers to settle their respective breaches by means of an Accepted Breach Agreement (ABA)."

The Financial Regulations for F1 Teams were introduced in the FIA Formula One World Championship from the 2021 season following unanimous approval of the F1 Teams. The intention of the Financial Regulations for F1 Teams is to limit spending in the Championship to ensure the long-term viability of the Championship and encourage convergence in performance between Competitors, thus creating more exciting racing.

For the 2023 season, the Financial Regulations for PU Manufacturers were introduced to regulate cost of development and supply of the new generation of Power Units that will be introduced from 2026.

The CCA is responsible for administering and monitoring compliance with the Financial Regulations, investigating instances of suspected non-compliance with the Financial Regulations through the review process, including by launching full investigations if it considers this warranted, and taking appropriate enforcement action in respect of any alleged breaches of the Financial Regulations.

The CCA has several options available to it when dealing with an alleged breach of the Financial Regulations. It can enter, when deemed appropriate, into a settlement referred to as an Accepted Breach Agreement with the F1 Team or PU Manufacturer concerned in case of a Procedural Breach or Minor Overspend Breach, or, if no agreement can be reached or the CCA considers it more appropriate, it can refer the case to the Cost Cap Adjudication Panel. In the event of an alleged Major Overspend Breach the CCA must refer the case to the Cost Cap Adjudication Panel.

The Cost Cap Adjudication Panel comprises a panel of 12 judges elected by the FIA General Assembly in accordance with the FIA Statutes from among the candidates proposed by either the FIA Sport Member Associations entitled to vote, or a group of not less than five F1 Teams, or a group of not less than three PU Manufacturers.

For both F1 Teams and PU Manufacturers, a Minor Overspend Breach (<5% of the Cost Cap) can result in Financial Penalties and/or Minor Sporting Penalties. A Material Overspend Breach (>5% of the Cost Cap), if confirmed before the Cost Cap Adjudication Panel, will result in a mandatory Constructors’ Championship points deduction and can result in Financial Penalties and/or Material Sporting Penalties.