With news of Honda pulling out of after the 2021 Formula 1 season, many wondered what’s next for the Japanese manufacturer. Not so soon after the announcement, Honda has confirmed that they have agreed to a multi-year extension in another racing series: IndyCar.

Honda has just stated that they will remain in IndyCar as an engine manufacturer for the new hybrid formula from 2023 and beyond. As such, they will develop a new 2.4-liter twin-turbocharged V6 hybrid engine for the series, and they say it will be good for 900 HP.

Honda to leave F1 but to stay in Indycar image

"Honda welcomes this step to the future by IndyCar, an action that mirrors Honda's efforts to develop and manufacture high performance, electrified products that will meet industry challenges and delight our customers," said Ted Klaus, president of Honda Performance Development. "At Honda, we race to develop our people, to innovate technologies, and to engage fans. We are proud of our uninterrupted, 27-year leadership in IndyCar, and look forward to delivering a next-generation Honda 2.4-liter hybrid power unit with more than 900 horsepower."

But the question remains: why IndyCar and not Formula One for Honda?

Honda to leave F1 but to stay in Indycar image

While F1 has been the pinnacle of global motorsport, Honda has been involved with IndyCar since 1994. Despite Honda's success in Formula One in the past that resulted in 3 race victories as a full Constructor, 77 victories as an engine supplier, 6 Constructors' Championships with McLaren, and 5 Drivers' Championships with Ayrton Senna and Alain Prost, Honda's success in IndyCar is more telling. They have 252 victories from 457 races, 16 drivers' titles, 8 manufacturers' championships, and 13 Indianapolis 500 victories.

IndyCar also has a far larger race attendance than Formula One. By comparison, the Indianapolis 500 had 300,000 attendees in 2019, whereas the Monaco Grand Prix typically reports about 200,000 attendees. F1 reports that they do have far more in terms of global television viewership than IndyCar.

There's also the issue of cost. F1 is not a level playing field. Constructors and engine suppliers spend a lot to be competitive, whereas in IndyCar costs are significantly less. And toss in the fact that IndyCar's transition to hybrid powertrains aligns well with Honda, that was perfect timing for the automaker that is also pushing for hybrids and electric vehicles. Globally, Honda expects two-thirds of its new vehicle sales to be electrified by 2030, and this will be a proving ground for their products in the future.

Why is Honda leaving F1 but not IndyCar and Sato? image

But perhaps the fact that Honda is winning regularly given that they are only one of two engine manufacturers in IndyCar is a good thing. And of course, they wouldn't want to leave Japanese ace driver Takuma Sato, a driver that the company has supported all throughout his career, and most visibly in Formula One.

It also helps that Sato has been winning consistently, and this year bagged the win at the Indianapolis 500 for the second tine in his career. So no, it doesn't look like Honda would leave Indy and Sato anytime soon.

That means Red Bull and Alpha Tauri, the two teams that race Honda engines (and have won with Honda engines) will have to look for a new engine supplier. Or build one themselves.