Pirelli motorsport director Paul Hembery says the tyre manufacturer needs to know 'sooner rather than later' whether it will be supplying tyres next year.
The official tyre supplier's three-year contract with Formula One expires at the end of this season.
Speaking to media in Barcelona last week Hembery said: 'You can imagine we do employ quite a lot of people in our Formula One project and we do need to know as a compamny at some point what we are meant to be doing.
'Talks are ongoing, making some progress, don't have any final solutions yet. But that has to happen sooner rather than later, for sure.'
Hembery indicated a deal needs to be reached before the halfway point of the year: 'Any negotiation or anything to do with contracts takes time. That's the phase we're in.'
'Progress is being made and we hope to see some definitive answers in the near future. I can't give you a date, these things take a long time. But I can't see us being here in June or July talking about 'are we staying in the sport?', that really starts to become impossible.'
Asked whether Pirelli intends to continue with its policy of producing tyres designed to create close racing, Hembery said: 'Well that's down to the teams. We're working on an input from them and also the promoter.'
'From that point of view we'll do what they want. At the moment, as long as everybody has the same technical challenge, the same technical opportunity, they've been quite happy with what we've been doing in trying to give them that extra technical challenge. So that's positive.
'If they change their mind, of course, we can do what they want. We can go to no degradation, no pit stop, that depends on what the sport really wants.'
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