Formula 1: Mercedes crippled by the cost cap?

The cost cap is the biggest adversary facing Mercedes’ mission to recover pace after coming out of the gates slowly in the 2022 Formula 1 season.

Between an apparent lack of power from their formerly grid-leading power unit and a car design that is suspected of producing excessive drag, Mercedes have had a shaky start to the new era of Formula 1 regulations.

At the dawn of these new rules though, there is no better time to reclaim ground on the leaders and return to a competitive state.

Bringing a new rear wing design to Saudi Arabia in an effort to reduce said drag, Mercedes remained well off of the pace of Ferrari and Red Bull but still a clear “best of the rest” despite a historically poor qualifying performance from Lewis Hamilton due to a setup approach which failed to pay off.

Hamilton still managed to climb his way back into the points with the help of numerous DNFs, and he had a brilliant battle with the Haas of Kevin Magnussen.

Entering the third round of the 2022 season, Mercedes are expected to implement a “major” upgrade. This comes at an adjusted Albert Park Circuit which will be sporting a more flowing and higher speed layout with four DRS zones, more closely resembling Jeddah Corniche Circuit than its former self.

Mercedes’ upgrades are projected to include a new rear wing concept, likely more dramatic than the cut-out seen in Saudi Arabia, and complementing floor upgrades.

Meanwhile, frontrunners Ferrari and Red Bull have been able to delay their first round of major upgrades.

Currently working through a speed-oriented portion of the calendar to begin the season, Ferrari are expected to introduce their first upgrades for either Imola or Spain while their championship rivals plan a seven-figure upgrade package focused on weight reduction for Imola.

While their championship rivals focus their spending on genuine improvements to their car design, Mercedes are stuck spending money fixing issues that should have never been present for their first race in Bahrain.

This not only represents a tangible disadvantage in the management of the $140 million budget cap but the loss of time during a crucial period of exponential development at the beginning of this new era of regulations.

Now let’s assume that Mercedes are able to implement all of the upgrades needed to get their car on pace with Ferrari and Red Bull by the summer break. We have just witnessed French and Hungarian Grands Prix in which three manufacturers have cars that can compete for pole and stay well within one second of each other over the course of a racing lap. This is fantastic until reality sets in.

Mercedes have just spent the majority of their season-long development budget playing catch-up to be in the hunt for wins by the halfway point of the season. This front-loaded development now leaves the team at the factory with little to no resources to implement upgrade packages as the high-speed venues of Spa and Monza come ever closer.

Meanwhile, Ferrari and Red Bull place an emphasis on summer break upgrades as they return to base for a month and analyze their shortcomings from the first 13 races. The two championship manufacturers go on to implement major upgrade packages encompassing a major portion of their development budget and return Mercedes to the designation of “best of the rest”.

In order to make the necessary gains to be competing for race wins, Mercedes will be investing disproportionate financial resources and jeopardizing their relative pace in the second half of the season. This also puts them on the back foot for the 2023 season as teams make major philosophical changes after a season of lessons about the new regulations.