Why is this interesting? - The Formula 1 Edition (Part Two)

On markets, regulations, and racing

This is a little bit of an experiment, so bear with us. Part of the fun of this email is getting to try our best to explain topics we’ve recently gone deep on. For me that’s been Formula 1. I started writing this as a way to learn more about the aerodynamics of the sport and it quickly ballooned to something much bigger. Rather than cutting it down, we’re running it as a two-parter (you can read yesterday’s part one if you missed it). Hope you enjoy. - Noah (NRB)

Noah here. In yesterday’s edition, I introduced some of the challenges facing F1, focusing on the lack of real competition as a result of an aerodynamics arms race. While the governing body has introduced a series of small changes over the last few years to try to increase overtaking, and therefore the product on the track, these were always just band-aids for the more sweeping changes that were coming with the 2021 rule changes. Every five or six years the series overhauls the “formula” that describes how cars must be designed in order to keep the sport fresh and maintain some competitive balance. The 2014 changes paved the way for Mercedes’ current dominance and many hope that 2021 will put an end to their reign. 

Why is this interesting?

Those rules will be locked down over the coming months, but the a proposal was released a few weeks ago and includes some big changes to the sport and car. For the sport itself, the biggest shift will be some caps on spending and standardized parts to try to bring the smallest teams a little more in line with the biggest teams. For the car, the focus is on allowing for aerodynamic elements under the car in exchange for a simplification of elements on the top. While most of yesterday’s edition was about the aerodynamic effects of the parts of the car you can see (front and rear wings in particular), the reality is that the majority of downforce (65%) is produced by the underbody.

Up until now, the rules have required that the underbody be almost totally flat, except for a thing called a diffuser at the very back of the car. The diffuser is kind of like a small wing underneath the car that takes all the air rushing between the floor and the road and directs it out a small opening. Since I’m a little outside my comfort zone when it comes to fluid dynamics (the field of physics that describes flow), let me turn to the F1 Dictionary: “A diffuser serves to eject air out from the underside of the car. This pulling action increases the velocity of the air below the car so that the more slowly moving air above the car will push the car into the ground.” The important part is that this small piece of equipment at the back of the car is an incredibly effective way to keep stuck to the ground at very high speeds, even around corners. It’s so effective, that when a team called Brawn GP introduced a “double diffuser” in 2009 it went on to win the F1 title in its first and only year of existence. (An interesting aside is that Ross Brawn, the team principal of Brawn GP, is now in charge of designing the 2021 technical specifications.)

In 2021 they’ll be able to extend that diffuser concept further underneath the car using a technique that’s generally referred to as “ground effect.” According to Formula 1, this will reduce the loss of downforce when following from 50% today all the way down to 5-10% in 2021. That’s crazy if it works. And there’s good reason to believe it will. For one, early wind tunnel testing seems to match their computer simulations. On top of that, the kind of “ground effect” they’re talking about was actually a part of F1 in the late-70s and early-80s. It was eventually banned because the rudimentary implementation created serious safety issues as cars cornering at high speeds could easily lose their downforce and fly off the track if something broke the seal between the car and the track (the cars literally had skirts that moved up and down to keep the air in). The Lotus 78 (pictured below) was the first to introduce this innovation in F1 and the 15% additional downforce it created allowed the team and its driver, Mario Andretti, to win the title in 1979.

Back to the beginning of part one, why is Mercedes so dominant? The short answer is I’m still not sure and there doesn’t seem to be much consensus amongst experts. One reason is that teams are very secretive and don’t patent their innovations, instead opting for trade secrets. As a result, they offer as little explanation as possible about the specifics of their cars (at least until it’s either discovered by the competition or it’s many years later). On top of that, much of the car is either under the bodywork (the engine, gearbox, etc.) or literally under the car (the underbody). To that point, with the floor producing so much downforce, I suspect there’s a lot more going on under there than we know about. Teams keep their floors a particularly closely guarded secret and they basically don’t show up unless the car flips over (which, thankfully, doesn’t happen all that often). 

When I asked serious F1 fans how this all happened, the answer most people offer is a kind of snowball effect: A better engine makes the aero package work better, which allows you to better maintain your tires, ultimately performing better on track, in turn attracting more sponsors that pay you more money, which you can pour back into the development of your car. It seems clear that the more integrated an aerodynamic innovation is, the harder it is to copy (similar to the idea of moats in business). One of the things Ross Brawn says about his fairytale 2009 season is that other teams were able to catch up halfway through the year because Brawn GP’s financial woes had left them without enough time to fully integrate the double diffuser into the concept of the car. In other words, if they had designed the whole thing around their innovation, the advantage would likely have sustained throughout the season.

While this all seems reasonable, it’s hardly the simple answer I was hoping for. After all, if it was easily knowable, it’s safe to assume the other teams would be more competitive. In that way, Formula 1 offers a fascinating study of a super-concentrated market economy. While all sports have rules, most are focused on ensuring the game remains largely an athletic pursuit. Motorsports, with F1 as the pinnacle, combines man with very high tech machines in a fascinating environment that matches heavy regulation with an otherwise very free market. F1 has far fewer “spec” parts than other racing series’, meaning almost all of the car can be imagined by the team as long as it stays within the formula. This leads to a particularly acute pendulum effect, where new regulations are introduced, adopted, and seemingly “solved” (aka exploited) to create a sustainable advantage. And then the cycle repeats again. (NRB)

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Thanks for reading,

Noah (NRB) & Colin (CJN)