Engines is the least of concerns. Mercedes win, not because they also produce the engine, but because they pour nearly half a billion euros into the car, with engines being a vanishingly small amount of that. They have a car with superior aerodynamics and mechanical grip. Making the engine standardized will not change that.
> Mercedes win, not because they also produce the engine, but because they pour nearly half a billion euros into the car
It takes more than just throwing money at the problem to win. Otherwise, Red Bull (paying for two teams in full) and Ferrari would be doing a lot better right now.
According to this source[0], for 2019, Mercedes spent $484MM, Ferrari $463MM, Red Bull $445MM, Red Bull 2 (aka Toro Rosso) $138M.
Ferrari's last driver's championship win was 2007, and last constructors championship win was 2008. If simply outspending their competitors by 5% would make all the difference, I think they would have tried it by now (and infact, if you look at previous years, they have, and failed)
Mercedes get prize money and sponsor money. On top of that they get revenue from supplying engines to other teams.
The team might spent untold hundreds of millions (of money they have earned) but the parent Mercedes company spend thirty million a year.
For Mercedes this is excellent value for money, equivalent to a billion or so in paid advertising time on television.
Contrast this situation with teams at the back of the grid: no revenue from supplying engines, expenses for getting engines, poor sponsorship money, no income from a parent manufacturer. Oh, and little in the way of prize money. They do get some sponsorship money from their drivers though, either because they are in a Mercedes/Ferrari/Red Bull 'academy' or because the pay driver comes with sponsorship from his wealthy father or country.
That is simply not true. Mercedes had a huge head start in 2014 by starting the V6-hybrid engine development from 2012, while their competitors (Red Bull and Ferrari) were busy fighting for the championship with V8 engine in 2012 and 2013.
If F1 is serious about reducing costs, they have to at least standardize PU, like they did to ECU.