Formula One teams have agreed to cut the cost of customer engines by more than £12m from 2011, according to Ferrari chairman Luca di Montezemolo.
The move comes after motorsport boss Max Mosley asked the teams to come up with ways to cut costs in F1.
Montezemolo said that engines sold by manufacturers to teams would be slashed in cost in the future.
"We unanimously decided that by 2011 an engine will cost £4m, compared to the £16m plus they used to cost," he said.
The move will be a huge help to the smaller teams as they try to survive in F1.
Mosley has been concerned that F1 costs are now so high that privateer teams such as Williams, Red Bull and Force India – who do not make their own engines – are effectively unable to compete.
He has demanded all the teams agree ways of keeping costs down – and said he will come up with his own solutions if they fail to do so.
F1 constructors have recently created an organisation called the Formula One Teams Association (Fota) to represent their interests in conversations with governing body the FIA, of which Mosley is the president, and commercial body Formula One Management, run by Bernie Ecclestone.
Di Montezemolo has been nominated the chairman of Fota.
Montezemolo also revealed that he smashed a television set after watching McLaren's Lewis Hamilton snatch the world title from Felipe Massa at the final Grand Prix of the season at Interlagos.
"I broke the television, I must tell the truth," he said.
"When a television breaks it makes a terrible bang. My daughter in the other room was given an awful fright.
"Luckily we had another television so I was able to watch the podium ceremony, which I enjoyed."
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