Although the sport is currently experiencing a financially healthy period thanks to rising revenues and prize money, such a large cost hike will force teams to rethink their long-term planning. The effects will be felt especially by midfield outfits that operate with limited resources.
Rising costs: excluded from the budget cap, but…
At present, fuel expenses during the season fall within the annual cost cap that each team must report at year’s end. From 2026, however, with fuel prices expected to skyrocket, this category will effectively be excluded from the spending limit, preventing it from absorbing a disproportionate share of resources. But the change will not be entirely straightforward.
Instead of accounting for the actual fuel price, the cost cap will use a fixed benchmark, a “notional value” calculated in advance and based on fuel usage. The real expenditure will not count toward the budget submissions but will still weigh heavily on teams’ finances.
The rationale behind this approach is twofold: on the one hand, it levels the impact of fuel costs across the grid, preventing differences in suppliers or contracts from creating unfair advantages; on the other, it protects resources within the cost cap that must be allocated to other key areas, shielding them from unpredictable swings caused by fuel prices.
However, there is a downside. Smaller teams, already operating close to the limit of the cost cap, will still need to raise extra funds to cover the real cost of fuel outside of the regulated budget. In practice, this means financing two parallel expenses: the capped budget itself and, on top of that, the actual fuel bill, likely pushing teams to hunt for new sponsors or technical partners.
New revenue needed to cover fuel bills
Haas is one example. The American team, boosted by new sponsorships and technical deals, currently operates near the cap’s maximum. “The cost of fuel will be outside the cost cap, at least for the most part, but we still need to fund it. That means we have to find new revenue,” explained team principal Ayao Komatsu, stressing the importance of lowering expenses in the future.
Komatsu added: “It’s very important. We call it sustainable fuel, sustainable from an environmental perspective, but financially it is not sustainable. Formula 1 is at the cutting edge of innovative technology. Everyone accepts that at the beginning, new technology is very complex and, as pioneers, it is extremely expensive. We accept this, but there’s a certain limit. How can we make it financially sustainable as well? If you explained the real costs to the public, they would say: ‘How can this be sustainable? It’s not’. That’s why it’s good that as a Formula 1 community we are now discussing what can be done.”
The subject has returned forcefully in recent weeks, with teams and fuel suppliers working together to find ways of dealing with the price explosion. For 2026, though, little can be changed, as the technical regulations are already locked in and with only months to go before the new era begins, substantial revisions are off the table.
Teams will therefore have to live with this new expense for at least one season, absorbing it into their budgets while simultaneously seeking medium- and long-term solutions, possibly as early as 2027. The issue is particularly sensitive since sustainable fuels will also play a central role in the development of the future V8 engine currently being discussed, which could arrive around 2030.
Why are costs so high?
The steep price of sustainable fuels is primarily due to the complexity of their production and the need for a fully “green” supply chain in which every step, from raw material sourcing to processing, adheres to sustainability standards.
This requires a specific mix of ingredients that are particularly expensive, often far costlier than initially projected. Costs were expected to rise, but both teams and the FIA admit they have already exceeded early estimates, making it essential to assess possible ways to bring down the price per liter.
Fuel manufacturers are free to choose between synthetic and biofuel, as long as their products meet FIA specifications. Ahead of 2026, efficiency will take center stage, with weight and power output becoming decisive factors. Unsurprisingly, research and development expenses have surged, pushing final fuel prices beyond forecasts.
The FIA is fully aware of the issue, as Nikolas Tombazis had already highlighted before the summer break. The hope is that costs will gradually decline over time. Still, the governing body does not expect synthetic fuels to be widely adopted in road cars in the near future, largely due to their high price.
“There are parameters linked to energy content, evaporation characteristics and various fuel components, and all these aspects are quite close to what is used in road cars. But we don’t expect Formula 1 fuel to appear in mass-market vehicles the following year. Cost is a major barrier, and production expenses must come down,” Tombazis explained.
He continued: “Right now we’re not where we want to be in terms of production costs, but Formula 1 has a duty to innovate, and we’re pushing the development of these fuels to a very advanced stage. Gradually, prices should drop.”
“It’s clear we couldn’t predict where production costs would end up, and it was unrealistic to assume that Shell’s expenses would match Exxon’s, Petronas’ or others,” Tombazis concluded.
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