In Part 1 of this article, I made the argument that perhaps Mercedes is putting on a brave face, but the team knows that it cannot win this championship. I argued that this resignation is not due to power sportsmanship or the belief that there is nothing they can do to go faster. It has nothing to do with that.

Mercedes will not be bringing any significant updates to their car this year because the team has already hit its development limit in the budget, and they cannot do R&D anymore without compromising other expenses in the budget.

It is worth remembering that before the budget cap came into effect this year, Mercedes was one of the biggest teams in F1, not just because of the brand or the budget, but also the number of staff. The team counted about 980 employees in 2019. In the same year, Red Bull reported a total of 338 employees. This is pretty understandable since Mercedes has both an engine division in Brixworth and a chassis division in Brackley.

Mercedes had no problem maintaining this staff size in 2019 with a budget of $484 million. However, that size is all but sustainable under the new budget cap. I imagine this means that Mercedes has had to lay off a lot of team members that have been there for a long time. That could not have been good for team spirit and motivation. It is also not good for the team’s performance since all the people being laid off had real value.

But that alone is not the cause of Mercedes’ budget limitations. That has to do with specific events that happened earlier in the season. I have singled out these events because they were unplanned, and they would have eaten up all the margin the team had in the budget to upgrade the car throughout the season. These events were;

Bad Pre-season

It is not an overstatement to say that Mercedes had a horrible pre-season test. They racked up the fewest miles of any team and were over a second slower than Max Verstappen’s Red Bull which hit the ground running. Mercedes left the test with a lot of work to do and not a lot of time to do it.

Fast forward to the Bahrain Grand Prix, the exact location as the test, and Lewis was less than half a second behind Max in Qualifying and would line up alongside him on the front row. Lewis would go on to win the race. Mercedes had found over half a second since the test, and I don’t think that came cheap. They must have burnt through a fair share of the development budget to close the gap to Red Bull before the season even began.

Valtteri’s expensive shunt at Imola

If Mercedes was budget-limited before Imola, then they were in the red after. Valtteri Bottas had a coming together at high speed with George Russell, which badly damaged the chassis to the point that Toto Wolff referred to it as a “write-off.”

The shunt is estimated to have cost Mercedes well over a million dollars to rebuild the car. In his press conference after the race, Toto Wolff summed it up nicely.

“It’s quite a big shunt,” Wolff said. “Our car is almost a write-off in a cost-cap environment that is certainly not what we needed, and probably it’s going to limit upgrades that we’re able to do.

“We are very stretched on cost cap, and what we always feared is a total write-off of a car. This one is not going to be a total write-off, but almost, and that is not something we really wanted.”

That is as close to waving the white flag as Toto Wolff can get without risking his job, in my opinion. Mercedes simply has no margin to develop the car anymore. So what does this all mean?

Mercedes’ lack of development

Unfortunately, if I am right and Mercedes is already pressed against the budget cap, then this season is all but over. The pace in the RB16B coupled with the hunger in the Red Bull team to win their first championship since Vettel’s 2013 win will not be beaten by a car without any major upgrades all season.

Mercedes has decided to concede this championship in favor of the 2022 championship, which will wipe the slate clean. The allure to dominate another era will be more attractive than the desire to fight for this championship with one hand tied behind their backs.

I hope I am wrong. I hope they are just sandbagging while they prepare a significant upgrade to take the fight to Red Bull. I guess time will tell. 

Julius Kakwenzire is a self-confessed F1 addict. When he’s not getting emotional at the race track’s proceedings, he’s working on great fintech products at Lupiiya.