LONDON, England (CNN) -- Formula One's 10 teams have been given two years to cut spending -- or face potential ruin.
FIA president Max Mosley is determined to protect F1's future by introducing swingeing cost-cutting measures.
Max Mosley, the president of motorsport's governing body, the FIA, has made it clear changes are vital to ensure the sport's survival.
Earlier this week the FIA's World Motor Sport Council gave Mosley the authority to negotiate with the newly formed Formula One Teams' Association (FOTA).
After discussions with Luca di Montezemolo, FOTA chairman and president of Ferrari, an agreement was reached for Mosley to meet FOTA's board after the Chinese Grand Prix on October 19.
On the table will be ways of making "very significant and urgent reductions in costs," "maintaining the competitive element" as well as changes to future technical regulations.
"I really think it's a serious situation," Mosley told BBC Sport. "If we can't get this done for 2010, we would be in serious difficulty.
"I think we can survive through 2009, but if we don't get it done in 2010, we may be in serious problems.
"It isn't prompted by the credit crunch. This is something I've been campaigning for for two or three years. It has become apparent, long before the present economic difficulties, that Formula One was unsustainable."
The FIA has stated its intention to implement its own cost-cutting measures unless the teams quickly agree to solutions among themselves, which is part of the reason FOTA was set up.
Mosley has forewarned of a huge fall for F1 unless sustainability is put to the top of the agenda.
"Very crudely expressed, one of the teams at the back of the grid cannot possibly hope to raise more than -- including the money they get from Bernie [Ecclestone, F1's promoter] -- say €40 million ($54.8m), which in the real world is a huge sum of money, but that's the most they can raise," he said.
"To compete today, they need two or three times that and even then they're at the back of the grid. You can't run a business where the outgoings are two to three times the income -- not for very long.
"Some of the manufacturers may be in difficulty now as well, because if you look at their share prices, their profitability, their sales, the days when they could just toss out €100, €200, €300 million ($137m-$411m) a year, which is what Formula One costs those big companies, I think they're finished," Mosley said.
Independent teams such as Williams, who dominated F1 in the early to mid-90s, are now unable to compete on anything like a regular basis with leading duo Ferrari and McLaren.
Super Aguri folded earlier in the year after lengthy sponsorship struggles, and even those teams fortunate enough to have rich benefactors -- Red Bull, Toro Rosso and Force India -- rarely make an impression on the front of the grid.
But, according to Mosley, even those teams who cannot win are vital to the welfare of the sport.
"It depends at the moment on millionaires -- or billionaires, we don't have millionaires any more -- subsidising them, people like [Force India boss] Vijay Mallya of Kingfisher or Dietrich Mateschitz of Red Bull," he continued.
"Without them, those teams wouldn't be there. We've already got two gaps, we're likely to lose two or three more of the independent teams.
"Formula One cannot continue like that, that's been obvious for some time. At the moment we've got 20 cars. If we lost two teams we'd have 16, three teams -- 14. It then would cease to be a credible grid."
In 2006, Mosley secured a pan-team agreement on a five-year engine development freeze, saving millions in the process.
But the global economic situation has only strengthened his longstanding desire to have F1 tighten its belt.
And he knows where other immediate savings can be made -- without, most importantly, harming the show.
"At present the engine and gearbox together, for an independent team, is upwards of €30 million ($50m) a year," he concluded.
"That could be done for probably five percent of that cost without the person in the grandstand noticing any difference at all."