The F1 cost cap was introduced in 2021 in the hope of creating a level playing field for all teams in the sport. Before the 2021 season, the top teams could throw money at the car to gain advantages. However, now all teams can only spend up to $135 million.
When brought in for the 2021, the cap limit was $145 million. This sum was decreased in 2023 by 10 million and stayed the same through to the 2025 season. However, due to the 2026 season’s major regulation changes, the cost cap will be raised to $215 million.
What is included in the cost cap?
The F1 cost cap includes all expenses related to the car’s performance. All car parts are included in the cost cap, covering components like the steering wheel, front wing, sidepods and suspensions. However, the cap doesn’t cover the engine as some teams build their own with other teams purchase them, making it hard to regulate. Engine manufacturers do, however, have a separate cap.
🚨 | The FIA has announced that all 10 F1 teams adhered to the cost cap regulations for the 2023 season
Among the power unit manufacturers, Alpine and Honda were deemed to have made procedural breaches, though they did not go over the cost cap.
These breaches will be resolved… pic.twitter.com/HAkwsQckk2
— Fastest Pitstop (@FastestPitStop) September 11, 2024
The cap also covers all expenses for repairing or replacing damaged car parts. This was a struggle for Williams whose drivers had multiple crashes, meaning they had less money to upgrade their cars.
All salaries are covered within the cost cap except the drivers and the three highest-paid employees. This allows teams to give drivers lucrative contracts to keep them in the team or tempt them away to sign for them. All transportation costs are also within the cap.
Have any teams broken the cost cap?
The 2021 season was the first time the cost cap was introduced. That season, Red Bull was found guilty of a “minor overspend” and was punished. They received a $7 million fine and had their wind tunnel time reduced by ten percent. Seven-time world champion Lewis Hamilton criticised the punishment saying “it wasn’t big” and feared teams may overspend due to the punishment being like “a slap on the wrist.”
BREAKING: Red Bull Racing issued with financial and sporting sanctions for breaching the 2021 budget cap pic.twitter.com/gqtGrRiWwB
— Formula 1 (@F1) October 28, 2022
The 2023 season saw both Honda and Alpine punished for breaking the engine cap. Both were under the spending limit but were punished for procedural infringements. Honda was fined £462,000 for failing to file accurate reporting. Alpine were fined £308,000 for submitting inaccurate reports and several procedures had not been performed.
