Red Bull and AlphaTauri will continue with Honda engines until the end of 2024, it was officially confirmed on Monday.

Both teams had their future plans thrown into disarray last October when the Japanese manufacturer announced they would be leaving Formula 1 at the end of this season.

Honda's decision even raised the prospect of Red Bull returning to Renault power, which would have been the automatic outcome under the regulations.

Instead, the Austrian brand has reached a deal to move Honda engine production in-house from next year, doing so through the creation of the new Red Bull Powertrains company.

“We have been discussing this topic with Honda for some time and following the FIA’s decision to freeze power unit development from 2022, we could at last reach an agreement regarding the continued use of Honda’s hybrid power units,” said Red Bull advisor Helmut Marko via Formula1.com.

“We are grateful for Honda’s collaboration in this regard and for helping to ensure that both Red Bull Racing and Scuderia AlphaTauri continue to have competitive power units.

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"The establishment of Red Bull Powertrains Limited is a bold move by Red Bull but it is one we have made after careful and detailed consideration. We are aware of the huge commitment required but we believe the creation of this new company is the most competitive option for both teams.”

In his comments, Red Bull boss Christian Horner noted the huge amount of work now ahead of the company to be ready for 2022.

“This agreement represents a significant step for Red Bull in its Formula 1 journey," he said.

"We were understandably disappointed when Honda made the decision to leave the sport as an engine manufacturer, as our relationship yielded immediate success, but we are grateful for their support in facilitating this new agreement.

“Honda has invested significantly in hybrid technology to ensure the supply of competitive power units to both teams. We now begin the work of bringing the power unit division in-house and integrating the new facilities and personnel into our Technology Campus.

"In the meantime, we are fully focused on achieving the best possible results in what will be Honda’s final season as an official power unit supplier.”

Honda also saw the arrangement as a great way to pursue their own future direction, while seeing their seven years in F1 continue to bear fruit.

“Honda is pleased that, following our decision to leave Formula 1 at the end of 2021, we have been able to reach an agreement for the two Red Bull-owned teams to use our F1 PU technology in F1 after 2021," Chief Officer Brand and Communication Operations Koji Watanabe said.

“We are fully committed to our goal of Honda being carbon neutral by 2050, which is why we are diverting our F1 resources to this new target. However, as a company that has been involved in Formula 1 for several decades, we felt it was the right thing to do to help our two current teams and indeed the sport as a whole.

“By allowing Red Bull Racing and Scuderia AlphaTauri to use our F1 PU technology it should ensure they can race competitively, which is also good for the sport and the fans.”