How Formula E racing is a testbed for the future of EVs

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Season 7 of the Formula E World Championship, the FIA-sanctioned open-wheel electric racing league, is nearing a close after the latest two races at the New York City street circuit in the Red Hook neighborhood of Brooklyn, with only races in London and Berlin left to determine who will win the Driver and Constructor championships.

This year’s championship has been especially exciting with all teams using the "Gen 2" car for the last time, resulting in 9 different winners over the span of 11 races. Among those teams the drivers represent are a number of big manufacturers, including the likes of Porsche (POAHY), Mercedes-Benz (DMLRY), Audi (VWAGY), BMW (BMWYY), Nissan (NSANY), DS Automobiles (STLA), Jaguar (TTM), Nio (NIO), and Mahindra (MAHMF).

And while excitement is good for motorsports, that’s not the only reason why big manufacturers and brands spend small fortunes to compete in and sponsor racing.

The large car manufacturers are spending billions to develop and produce electric-powered vehicles — vehicles that they believe will be the future of transportation. Volkswagen will spend a $40 billion to develop and build EVs through 2025, GM will spend $35 billion in that same period, and Stellantis (formerly FCA) will spend $35.5 billion through the same time period as it closes the gap on EV spending.

And just this past week, with the E.U. looking to drop emissions from new vehicles to zero starting in 2035, the onus is on these brands to show buyers why electric vehicles can be exciting while gaining valuable insights and technical know-how from the demanding world of racing for their road cars.

NEW YORK, NY - JULY 10: In this handout provided by Jaguar Racing, Mitch Evans of New Zealand, Jaguar Racing, Jaguar I-TYPE 5, leads Andre Lotterer of Germany, Tag Heuer Porsche, Porsche 99X Electric, and Antonio Felix da Costa of Portugal, DS Techeetah, DS E-Tense FE21 during the ABB FIA Formula E Championship - New York City E-Prix Round 10 - on July 10, 2021 in New York City. (Photo by Jaguar Racing via Getty Images)

Racing as a testbed for EVs

“There’s this seismic shift throughout the whole world at the moment towards electric mobility as a sustainable form of mobility,” Ian James, team principal at Mercedes EQ Formula E team said in an interview with Yahoo Finance. "What we’ve got with Formula E is not only a marketing platform that we can use to promote the portfolio that we’re going to be developing over the years, but motorsports has always been for us a testbed — an opportunity for us to push the boundaries of the technology."

The drivers are aware of the opportunities as well, and see it as a way to make a statement themselves. “Big brands like Porsche, they have a purpose - they use the [Formula E] championship specifically for representing the technology," TAG Heuer Porsche Formula E driver Andre Lotterer said at an event this past week promoting the race. "I thought it was also an opportunity for me too, for the first time in my career to send a stronger message for a better future, and represent the race of the future."

LOTTERER Andre (ale), Tag Heuer Porsche, portrait during the ABB Formula E Championshop official pre-season test of season six at Circuit Ricardo Tormo in Valencia on October 15, 16, 17 and 18 of 2019, Spain.  (Photo by Xavier Bonilla/NurPhoto via Getty Images)
LOTTERER Andre (ale), Tag Heuer Porsche, portrait during the ABB Formula E Championshop official pre-season test of season six at Circuit Ricardo Tormo in Valencia on October 15, 16, 17 and 18 of 2019, Spain. (Photo by Xavier Bonilla/NurPhoto via Getty Images) (NurPhoto via Getty Images)

At the race this weekend, in between qualifying and the actual race, Porsche was giving select clients and journalists a taste of that electric future with "hot laps," or drives around the race circuit with professional drivers at the helm of Porsche's all-electric Taycan sedan. These were not a leisurely moseys around the track; these pro drivers were pushing the cars to their limits, giving passengers a sense of the raw speed and agility of these electric cars. Jaguar and BWM were also giving their clients the "VIP Experience" as well, with hot laps around the circuit with the BMW i8 roadster safety car leading the laps.

So branding, innovation, and the technology transfer from the race team to the road car division and vice versa, this seems to the recipe that makes the most sense for the big auto manufacturers in Formula E. "What I expect to see over the next few years is us really testing out those new materials, technologies, processes," says Mercedes' Ian James. "Making the cars as efficient as they can be, learning from that, and then that learning being transferred across to the road cars," he said.

NEW YORK, NY - JUNE 09: Former World Cup Alpine Ski racer, Lindsey Vonn, during the ABB FIA Formula E Championship - New York City E-Prix Round 10 - on June 9, 2021 in New York City. (Photo by Jaguar Racing via Getty Images)
NEW YORK, NY - JUNE 09: Former World Cup Alpine Ski racer, Lindsey Vonn, during the ABB FIA Formula E Championship - New York City E-Prix Round 10 - on June 9, 2021 in New York City. (Photo by Jaguar Racing via Getty Images) (Handout via Getty Images)

This is of course was echoed by Mercedes' rival in the championship, Porsche. “We always think about the transfer of technology between motorsport and road cars; at Porsche it's part of our DNA. We always try to be with motorsports one step ahead, and we use it as a laboratory,” said Pascal Zurlinden, director of factory motorsports at Porsche, from a very noisy, and hectic, pit lane.

For Porsche, the electric future is already here, but there's still a long way to go. And that's what Formula E is for the brand - a working laboratory, but also the loadstar if you will for the future of where electrification is headed.

“The Taycan [electric vehicle] was presented two weeks before the world premiere [of Porsche’s Formula E race car]," Zurlinden says. "They were developed a bit in parallel, but what we are seeing here [with Formula E] is for the next generation of cars."

36 LOTTERER Andre (GER), TAG Heuer Porsche Formula E Team, Porsche 99X Electric, action during the ABB Formula E Championship official pre-season test at Circuit Ricardo Tormo in Valencia on November 28, 29 and December 1 in Spain.  (Photo by Xavier Bonilla/NurPhoto via Getty Images)
36 LOTTERER Andre (GER), TAG Heuer Porsche Formula E Team, Porsche 99X Electric, action during the ABB Formula E Championship official pre-season test at Circuit Ricardo Tormo in Valencia on November 28, 29 and December 1 in Spain. (Photo by Xavier Bonilla/NurPhoto via Getty Images) (NurPhoto via Getty Images)

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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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