LONDON - Formula E could be breaking even already were it not investing for the future, chief executive Alejandro Agag said on Monday after the electric motor racing series reported continuing losses in its latest annual accounts.
Accounts filed at Companies House showed Formula E Operations Ltd reduced its operating loss to 33.7 million euros ($38.32 million) at end-July 2016, a period covering its second season, from a previous 62.7 million.
Net liabilities rose to 107.2 million euros from 72.1 million, while total revenues reached 56.6 million from a previous 19.7 million.
"Everything is going according to plan," Agag, whose city-based series will be racing in New York for the first time on July 15 and 16, told Reuters in an interview at his London offices.
"Actually we are doing incredibly well financially according to our plan.
"We could have broken even this year but we decided to invest more in marketing and promotion. We decided to add races like the one in New York, which is in year one a race which is costing, we have significant capital expenditure."
"It's really up to us when we want to go to break even or not. We could be in break-even now, we could be in break-even next season but we may decide to invest more in marketing and promotion."
Agag said the shareholders, including John Malone's Liberty Global and Discovery Communications, were supportive of the strategy and the series had attracted more investors, sponsors and car manufacturers.
The New York races will be held in Brooklyn's Red hook neighborhood, with lower Manhattan and the Statue of Liberty as a backdrop with technology partner Qualcomm securing the naming rights.
Agag, whose series plays down competition with Liberty Media-owned Formula One, said more carmakers were set to join a series increasingly aligned with their commercial focus.
"I think Formula E has become the preferred destination for manufacturers and there are a few reasons for that," said the Spaniard.
"Obviously, one is that it is electric and manufacturers are more and more focusing on electric cars...and we are the only platform really to help them promote that technology and those types of cars.
"And second, because of the cost. The cost of the team in Formula E is very moderate."
Whereas top Formula One teams can burn through $300 million a year, as can the likes of Toyota in the World Endurance Championship, the budgets of successful Formula E teams are between 10 and 15 million.
"If a manufacturer wants to spend a big amount of money, he can do it in Formula One. He cannot do it in Formula E," said Agag.
"But if he wants to spend a moderate amount of money and be in a technology where they are all pushing, then Formula E is a very good option.
"This is why we have now a number of manufacturers and there will be more coming in the near future."
A source at Audi, owned by Volkswagen who are battling to recover from an emissions scandal, said at the time that the move would save the German carmaker nearly 100 million euros per year.
Reported by Alan Baldwin