Pressure for a new car formula came from the manufacturers already competing in the WRC, who wanted regulations that reflected changes in consumer marketing preferences and addressed the rising costs of campaigning at the top level. The move to Rally1 was approved by the FIA in June 2018 as part of a broader overhaul of the WRC's structure and the wider Rally Pyramid of international competition. Unlike previous top-level rally categories, Rally1 cars are not required to be homologated in Group A or N and have no minimum series production requirement, classifying them as Category II purpose-built competition vehicles. They must, however, remain visually identifiable as being based on a production road car.
Rally1 cars retain the established 1.6-litre global race engine producing 386 PS, but add a hybrid electric power unit supplied uniformly to all teams by Compact Dynamics, incorporating a Kreisel Electric battery. On special stages, this hybrid system delivers a boost of up to 100 kW (136 PS) alongside the combustion engine, and recuperates kinetic energy under braking. On liaison road sections, the system can power the car in fully electric mode through designated zero-emission zones defined in the rally roadbook.
Drivers select from three deployment modes and three recuperation modes before each special stage and cannot alter these settings during the stage itself. The hybrid system adds approximately 84 kg to the car's weight and operates at 750 volts, requiring the cars to carry HY identification — white letters on a red background — on the door panel. Crews must also carry high-voltage gloves for use in the event of a system fault. The hybrid system was discontinued after 2024, with teams citing the prohibitive cost of repairing damaged units.
Other significant technical changes from the previous World Rally Car specification include: a switch to synthetic fuels claimed to be sustainable and renewable; installation of Artificial Intelligence Safety Cameras on special stages; simplified suspension with reduced travel; a reduction from six to five forward gears (eliminating flappy-paddle shifters, in line with Rally2 cars); removal of the active central differential; a ban on liquid-cooled brakes; simplified fuel tank geometry; a simplified turbo installation; and the removal of certain aerodynamic components including the rear diffuser and hidden cooling ducts that had added cost and been vulnerable to damage. Tubular space frame chassis are permitted alongside production bodyshells.
Rally1 cars are restricted to World Rally Championship use and must be entered by manufacturer teams. They may appear on individual non-WRC rallies at the manufacturers' discretion but cannot score points in any other championship.
The Rally1 specification represented the most significant regulatory change to top-level WRC cars in several years. The introduction of hybrid power aligned the championship with broader automotive industry trends, while the standardised hybrid unit helped manage costs by preventing a technology race among manufacturers. The subsequent withdrawal of the hybrid system from 2025 onward reflected the practical realities of operating complex, expensive technology in the highly demanding environment of international rally competition.