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Red Bull don’t have any expertise in-house, but Honda engine R&D is in Milton Keynes, so not a million miles away. Pretty sure the engine (or at least some of it) is developed there because the Honda engineers seemed to be using it as some kind of HQ when I was working there and that’s how Christian Horner kind of referred to it as. Could have misinterpreted that though.
I can’t say how much was moved in-house with the switch to Honda power because it was after I left. I know they had in-house electronics capability and I can see that some of the carbon parts on the engine are definitely Red Bull designed and made, not Honda.
Can't imagine RB have any sort of engine development capacity in house. I don't know much about engine development but I imagine it'd take a lot more than just poaching the Honda engineers that the team regularly works with.
But yeah, don't think the Renault unit will exactly be a drag and drop replacement so they're certainly in a pickle. Merc won't want to give their closest rival their engine and they probably wouldn't touch a Ferrari engine with a bargepole. Since Renault have no customers they'd be forced to supply them.
Honestly at this point if F1 shit the bed and all the star drivers moved to a spec series I wouldn't really mind. But I'm more on the F1 racing fan side as opposed to the F1 tech fan side.