Mercedes has been granted permission to pursue engine upgrades for the 2026 and 2027 Formula One seasons following an evaluation by the sport’s governing body, the FIA. This decision comes despite Mercedes leading both the Drivers’ and Constructors’ Championships by a wide margin in the current campaign.

According to the FIA’s announcement on August 26, Mercedes will be allowed one additional engine homologation in 2026 and another in 2027, accompanied by corresponding increases in cost cap allowances and dyno testing. These upgrades fall under the FIA’s Additional Development and Upgrade Opportunities (ADUO) mechanism, which was introduced this year to maintain competitive balance among power unit manufacturers.

The ADUO system permits engine manufacturers to pursue upgrades if their internal combustion engine (ICE) performance lags the best in the field by at least 2 percent during specific review intervals. The first review period ended after the Canadian Grand Prix in May, followed by a second after the Hungarian Grand Prix in late July.

In the first review, Mercedes was found to be between 2 and 4 percent behind the top-performing engine, qualifying them for the limited engine upgrades. By contrast, Audi, Ferrari, and Honda each exceeded the 4 percent threshold and were granted two homologations in both 2026 and 2027. No upgrades were approved after the second review period.

Notably, Red Bull’s power unit—used by the Red Bull and sister Racing Bulls teams—was deemed the benchmark engine for these assessments, despite the team’s lack of race victories in 2026 and their position fourth in the Constructors’ Championship. This comes as Red Bull introduced their first in-house power unit this season in partnership with Ford.

Mercedes currently leads Ferrari by 87 points after 12 rounds, with Red Bull trailing 239 points behind the leader. McLaren, positioned third in the standings and winners of the last two races, also utilize Mercedes engines.

The ADUO ratings stirred controversy earlier in the season when they leaked after the initial review, generating questions about whether the upgrade allowances favored already dominant teams. Red Bull founder and world champion Max Verstappen expressed surprise at the findings and sought clarification in June, concerned about the competitive implications.

Nikolas Tombazis, the FIA’s single-seater director, emphasized the rigor of the analysis and expressed confidence in the results. He also acknowledged that as the ADUO system is new, adjustments may be made in consultation with all power unit manufacturers in future seasons.