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Alpine CEO on the business of F1 racing

Alpine CEO Laurent Rossi joined Yahoo Finance to discuss the business of Formula 1 racing, and the road car business.

Video transcript

- Well, the lucky folks in Austin, Texas, get to hear the roar of Formula One race cars this week. And to help us understand how Formula One is growing and could grow beyond just Texas, let's bring in Laurent Rossi. He is Alpine CEO, the sports car manufacturer, along with our auto-- I was going to call you an auto nerd, Pras, because I know you love cars. Pras Subramanian, who is also our executive producer and car reporter here at Yahoo Finance.

Mr. Rossi, good to have you here. How important is this, you know, this Formula One race in Austin, especially as F1 looks to go beyond the cities where it already is racing in the United States?

LAURENT ROSSI: Hi, good afternoon. Thanks for having me. It's quite important, because it's building up on the momentum that the Formula One has gathered in the past two years, mostly thanks to better coverage, especially on streaming, but also with Liberty Media doing a pretty good job at advertising the sport. And I guess it's only fair that we have another Grand Prix in the US, in addition to the one already existing.

So Austin this year, Miami next year. I think it's good for the sport. It's going to build, like I said, on the good base that has been building up in the past few years.

PRAS SUBRAMANIAN: Hey, Laurent, Pras here. You know, Adam and I'll probably go to that Miami race next year, hopefully. But question about the future of the sport, a lot of rules changes happening in the next year or two. Do you ever see a future where we shift from hybridization to full electrification in F1?

LAURENT ROSSI: Ooh, that's a tough question, to be honest. At the moment it is not possible, really, to imagine a full electric car, I think, at the same performance that the current F1s are providing. So it would change the show quite a bit, not just in terms of raw performance, like lap time, if you will. but also even the noise. So it's a bit of a difficult one to answer.

That said, it's a preoccupation of everyone to go greener. And it's only normal that, given the future of the automotive industry is mostly electric, Formula One is converging towards more electric. So whether it's going to be more hybrids, hybrids with sustainable fuels, other solutions such as hydrogen, we don't know. But it's still under kind of like reflection if you will. We're all thinking about it, all the constituents, the teams, the power engine manufacturers, the OEMs as well, the automotive manufacturers.

We all think about it together with the FIA and Formula One management organization, and trying to see what's the right path for the sport to be sustainable and meaningful and relevant.

PRAS SUBRAMANIAN: So this is Alpine's first year in Formula One, obviously part of the Renault-- before that the Renault team, and now Alpine. You guys also sell road cars in Europe, and then possibly expanding that, I imagine. What's it like, having that F1 team there to market the business? Has that been a big boost for you guys?

LAURENT ROSSI: Yeah, absolutely. That's actually the idea behind the whole move. The Renault brand was present in Formula One, and the Renault group has been in Formula One for 45 years. The return on investment was not really high enough, because, basically, we hit a bit of a plateau in terms of like the type of metrics. We would have to win to justify the heavy investment in Formula One.

At the same time, it's part of the legacy of the group. On the other hand, the Alpine brand is a very niche brand, but born from motorsports, back in the '60s to the '90s. It was discontinued. But when we relaunched a new car, a small car, a sporty coupe, if you will, and we needed a bit of exposure.

And we figured that we could hit two birds with one stone, and basically leverage the media platform that the Formula One is providing, and a growing one, that is, to basically expand the visibility and footprint of Alpine. And it works, because since the beginning of the year, all our metrics are basically 100% high up. We are basically selling twice more cars, only because we are exposed in 150-170 countries every other week through Formula One, amongst other things.

- Yeah, and in the past, over the last couple of days, I know we discussed this path of how you plan to reach the summit of Formula One by 2024, so in just three years from now. Lay out to us what that roadmap looks like, and how you're planning to achieve that, because it doesn't give you much time.

LAURENT ROSSI: No, that's right. It's not a lot of time. In fact, it's simply based on the fact that the current era, I mean the next era, that's going to happen in 2022, will last three, potentially four years. So the idea is to grow, throughout those four years, and make sure that we get to a point at the end of this new era, what I mean by new era is new technical regulations that will change dramatically the way the car looks, the way the car is designed.

We all start from a blank page, all of the 10 teams. And we're going to be entering also a financial, a new set of financial regulations, that are going to cap in costs. So the idea is leveraging this blank page we're starting from, and the cost cap that's going to level off the playing field, if you will, we feel like it's going to be down to efficiency, the way you do things, savviness, experience, and that we have.

So it's not going to be a fight with shear bars, it's going to be a fight with expertise. And we can potentially make our way back up to the top of the podium. And we want to simply, like, make progress every single race, so more often talking about the 100 race plan, because we have more or less four seasons, including this one ahead of us, 25 races a season, more or less, who's counting, and that's 100 races for us to keep on making progress, race after race, until we get back to a place that's more in line with our ambition, that is to say, contending for podiums and potentially contending for the title, even though you don't decide that. It's racing.

PRAS SUBRAMANIAN: Hey, Laurent, speaking of racing, you guys had a big win this year. But I want to talk to you about the Netflix effect, the Drive to Survive show, how big an effect that's had on the sport. It seems to have grown in popularity, especially out here in the US, because of Netflix showing that TV show behind the scenes stuff. How big is that for you? And do you think, are you guys going to have kind of a piece in it next year with Esteban's win?

LAURENT ROSSI: Yeah, well, I'll comment on the two things. First, the Netflix effect is big, no doubt. It's helping us quite a bit, because, in fact, it's showing the other side of Formula One, the one that people actually didn't really know about, because I have to admit it, Formula One had this quite an antiquated image of like a sport for like petrol heads, with a macho twist on it, which was really not something you would want to have.

But it got modern. It got like a bit different, the current management, the FIA are doing a tremendous job at making sure that it becomes relevant, that it's tackling the real issues, while being still entertainment. And Netflix showed that. It showed the other side of the sport. It didn't show really like the technical part of it, or the racing part of it. You hardly see anything about like the results of the races or the technology that those incredible cars are marking.

It's showing, like, the life of those people making Formula One, the drivers, but just not, the lives of the teams in the middle. And that brought a whole lot of different audience, if you will, which is helping us, because suddenly it's a sport like any other, where people can come in and share a moment, just like the American sports. And that's what we like, as well, because, combined with the cost cap I was mentioning earlier on and the revenue, we're moving towards pretty much like an American sport with a franchise type of model, and an entertainment that goes beyond just the race itself.

It goes way beyond that. It's bringing to people something different, something they can connect with. And that's quite important. Esteban's victory, it's another story. It's basically one of the first steps in the progress we wanted to make race year after year. We basically made quick steps already. But we stay very level-headed. It's only one step and we have plenty of others before we get there consistently.