The 2007 season brought a significant change to the tyre landscape: Michelin had withdrawn from Formula One at the end of 2006, making this the first race since the 2000 Malaysian Grand Prix in which all competitors used Bridgestone tyres exclusively. Hamilton arrived at Melbourne as a highly anticipated rookie alongside defending double champion Alonso at McLaren. Ferrari retained Kimi Räikkönen alongside Felipe Massa following Räikkönen's title-winning 2007 debut season at Maranello — though this was his first race for the team.
Ferrari and McLaren were the pacesetters throughout practice. Räikkönen topped Q1 before Alonso set the benchmark in Q2 with a 1:25.326. In the final session Alonso posted a 1:27.050 before Räikkönen went a second quicker with a 1:26.072, claiming pole. Nick Heidfeld's BMW Sauber split the McLarens in third as Hamilton had an untidy middle sector and ended fourth. Felipe Massa was eliminated in Q2 after a gearbox problem halted his Ferrari, then received a ten-place grid penalty for an engine change, dropping him to the back of the grid.
At the start Räikkönen pulled away cleanly. Heidfeld passed Alonso on the left, relegating the defending champion to fourth. Hamilton, starting third, took the outside line into the first corner to claim third from Alonso. By lap five Räikkönen had a two-and-a-half-second lead over Heidfeld, while Hamilton ran a composed third.
Heidfeld made the first stop from second on lap 15. Räikkönen pitted four laps later and rejoined in fourth behind Hamilton, who led the race on his debut for the first time. Alonso pitted first of the McLarens, suggesting Hamilton was carrying a heavier fuel load. Hamilton pitted a lap later and rejoined behind Räikkönen, who had reclaimed the lead. An attempt by Adrian Sutil to hold up Alonso earned a drive-through penalty for Sutil.
Christijan Albers in the Spyker became the first retirement of the new season after missing his braking point at the Sports Center corner. Scott Speed's Toro Rosso retired on lap 31 when two tyres deflated and he crashed at the Clark chicane. Robert Kubica retired six laps later with gearbox failure, a component he had identified as a concern in pre-season testing.
Räikkönen made his final stop and rejoined third, behind both McLarens. Hamilton pitted first of the two, allowing Alonso to lead briefly. Alonso pitted a lap later and rejoined ahead of Hamilton, with Räikkönen taking his lead back. On lap 49, David Coulthard's car vaulted over Alexander Wurz's Williams at the chicane in a collision; both drivers escaped unharmed.
Räikkönen won by 7.2 seconds from Alonso, with Hamilton 18 seconds further back in third. Hamilton became the first driver to finish on the podium on his Grand Prix debut since Jacques Villeneuve at the 1996 Australian Grand Prix. It was also the first time a driver had won on their debut race for Ferrari since Nigel Mansell in 1989. Disregarding the inaugural 1950 season when all drivers were making their championship debuts, it was the first World Championship race in which all three podium finishers were debuting for their respective teams.
Post-race attention focused on Bridgestone's tyre markings. The regulations required the softer compound to be visibly distinguishable on track, but the small white dot on the outer sidewall was judged inadequate. From the Malaysian Grand Prix, Bridgestone painted the second groove from the outside white to aid identification for viewers and competitors.
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