Mercedes started the 2026 season with the best car on the grid. In the following months, rivals developed faster, introduced more upgrades, and caught up with them. Mercedes claims that due to budget reasons, they cannot respond. What is Mercedes up to with car development in 2026?
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F1 teams are limited by a budget cap of $215 million per year (new value from 2026). Most of the budget is fixed costs, e.g., employee salaries, factory maintenance, material purchases, etc. According to statements from team principals in recent years, each team plans a certain amount for development during the season, which they mainly allocate to producing new components, including spares. Therefore, if a team has many crashes, it affects the spending on new parts because they have to produce more spares in the current specification. Development in the factory is constant; employees perform their duties, and work continues in the wind tunnel. Costs directly related to car development that impact the team’s budget appear after producing components and using them on track.
Intensive F1 car development in 2026
Anyone who knows Formula 1 understands that in the first year of new technical regulations, in-season development is always very significant. We have seen since the start of the 2026 season that teams bring many upgrades, and car performance is increasing. Teams copy innovations introduced by rivals and must react to what happens with the competition. Therefore, each team had to plan more money in their budget this year for in-season development. McLaren, Ferrari, and Red Bull introduced many changes to their cars this year, with large upgrade packages as well as small novelties. Mercedes had only one large upgrade package (in Canada), plus minor changes.
According to FIA data on reported aerodynamic upgrades from the Australian GP to the Dutch GP, Ferrari introduced 40 upgrades, Red Bull and McLaren 38 each, and Mercedes 24. The current world championship leader is developing slower than most teams on the grid; only Williams introduced a comparably small number of upgrades (they have their problems and are preparing a B version of the car for the Azerbaijan GP). Not all upgrades are equal, but according to calculations by The Race, Red Bull has spent the most on car development this year, followed by McLaren and Ferrari, with Mercedes far behind (Source). This concerns aerodynamic development; teams also develop other areas of their cars, which they do not disclose publicly. For example, Red Bull in the front had to spend a lot this year on reducing car weight. Therefore, FIA information does not show the full picture of the scale of development of specific teams.
James Allison said in a Mercedes podcast published during the summer break that aerodynamic development in the wind tunnel this year is 6-7 times faster than last year, translating to a 0.5-second gain in two months. Changes in the power balance at the front are related to the fact that upgrade packages this year provide very large gains, so whoever introduces them earlier can temporarily gain an advantage. According to Allison, Mercedes invested a lot in the first version of the car they started the season with, which is why in-season development is less intense than rivals.
Allison’s words are interesting, but at the same time, he contradicts himself regarding Mercedes’ plans. If the car can be improved by 0.5 seconds in two months, rivals can easily catch up if they planned slower development. Therefore, Mercedes’ approach seems completely illogical. At the start of the season, Mercedes’ advantage was not large enough to control the competition by introducing few upgrades.
Slower Mercedes development in 2026 and possible explanations
Mercedes started the season with a very developed W17 car; they certainly spent more on its preparation than rivals, but part of these expenses was accounted for in 2025. They do not hide that they wanted to start the season strongly, build an advantage, and then shift focus to next year’s development. This is a known Mercedes strategy from their dominant years. The problem this year is numerous failures, as they lost many points and halfway through the season do not have a safe points lead over rivals to abandon current car development.
We know the team is preparing a large upgrade package for the Bahrain GP in Malaysia. It was originally planned for the Singapore GP but is now planned to be introduced a week earlier at the beginning of October. However, we do not know how large this package will be. If they completely rebuild the car, it will justify why they introduced fewer changes mid-season. If it is only a few changes, their approach to this year will raise many doubts.
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There were rumors about a large Mercedes upgrade package for the British GP, then the Dutch GP. Ultimately, it turns out they will introduce it at the Bahrain GP in early October. The rest of the top teams will introduce 3-4 large upgrade packages during the season, and Mercedes two. Importantly, as early as June, Mercedes representatives said they have many upgrades ready in the factory but are waiting for the right moment to introduce them. If we believe James Allison’s words about aerodynamic development at a scale of 0.5 seconds in two months, Mercedes should gain about a whole second with the October package, as their previous large package was at the end of May. This is theory but shows they must have large upgrades prepared in the factory.
Several possible explanations for Mercedes’ different approach to development this year
– They may have made a mistake before this season and planned too small a budget for in-season development. They are the largest team with the most employees, possibly having higher fixed costs than rivals, thus less room for development spending. In my opinion, this is not true because in previous seasons they developed at a similar scale to rivals, and nothing suggested different budget assumptions.
– They may have actually spent a lot before the season, rebuilding the car between the first test phase and the season start. Their car has not had overweight since the start of the year. They certainly invested a lot in it, which could limit in-season development. However, I do not think this is a significant limitation. Ferrari also started the season with a good car, no overweight, and innovations.
– Mercedes may be planning a heavily changed car for the 2027 season, having started its development earlier and spending a large part of this year’s budget on next year. Therefore, they try to limit current car development, aiming to win both titles this year at minimal cost. During their dominance from 2014 to 2019, before the budget cap, Mercedes always tried to start next car development early and started seasons strongly. This could be a real explanation. They did not introduce upgrades to save budget but were surprised by the scale of rivals’ upgrades during the summer months. They had to change their plan and are now planning a bigger package for the Bahrain GP to respond, which will affect 2027 season plans.
– Mercedes is planning a really large upgrade package for the Bahrain GP, changing many elements, which will be very costly. This year we have examples of teams like Aston Martin, Alpine, and soon Williams, which prepared one large upgrade package and brought few changes just before it to save budget. This is the simplest explanation.
Summary
The fact that Mercedes has currently been caught by rivals is not a big problem for them if the prepared upgrade package brings noticeable improvement. From the Bahrain GP in Malaysia, there will be 7 or 8 more race weekends, about 1/3 of the season. With effective upgrades, they will again pull away from rivals and secure both championship titles. We do not expect major upgrades from other top teams as they have already spent much of their budget. McLaren announces a package for the Azerbaijan GP, and Ferrari is also expected to have something then. There is silence regarding Red Bull; it is unclear if it is “before the storm” or if they have already stopped intensive development of this year’s car.
From an independent fan’s perspective, we can thank Mercedes for this approach. The start of the season suggested their dominance, but thanks to slower development, rivals caught up, we have a very close front, and recently McLaren and Ferrari drivers have been winning races.
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