It was announced today that Honda would supply both McLaren and Sauber with engines for the 2018 Formula One season. There had been much speculation about whether or not McLaren would stick with Honda next year, or even through the rest of this season. All of that talk can be put to rest now.
Sauber making the switch to Honda power isn't much of a surprise. Currently, Sauber uses 2016-spec (i.e. outdated) Ferrari engines. These engines are doing Sauber no favors; they are down on power and aren't going to be developed any further.
Switching to Honda is somewhat of a gamble, but not as much of one as you'd think. Honda is convinced that its redesigned engine for 2017 is good, but like any mechanical product, it needs to be tested in order to make it better. The issue is that they are only now getting real-world usage data from it, during the actual races. Formula One's testing restrictions don't allow for Honda to log track miles on the engine.
In order to improve and develop its engine, Honda needs to supply them to more than one team. This provides more data and feedback to work with. More data translates to quicker development-and hopefully, better reliability.
Honda's 2017 engine was a new design, significantly different from the one it produced in 2016. The company knew that 2017 would be a development year, and are going all in for 2018. Honda and McLaren have presumably had a very long chat about how the rest of 2017 will go, and it's not going to be pretty. Because of the extent of the issues, McLaren's F1 cars this year are pretty much going to be development mules for 2018.
Honda has most likely made promises to both McLaren and Sauber that 2018 will be different. Neither would have signed on to use the engines with out Honda's word and some hard data to back those words up. The 2018 Honda engine has to be more than just reliable; it has to be competitive. It has to win...at least, for McLaren.
Just last night before the Russian Grand Prix, the notably opinionated and slightly off-kilter Eddie Jordan said that McLaren was going to dump Honda for Mercedes power at the end of the season. While his comments have been proven to be wrong, he may have been right at the time. Jordan, along with similar talk from others, may have forced Honda's hand. McLaren was more than likely shopping for a new engine and may have been close to signing a contract. With all the troubles that Honda has had, they have no bargaining power. The terms of the deals struck with McLaren and Sauber are likely very good for the teams.
Honda could very well have thrown in the towel at this point. The last few years of Formula One have been very expensive for the automaker. The fact that they are pushing forward is good for Formula One. Honda has to know that it will make huge strides in the 2018 season...otherwise what would be the point?