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Honda is talking to Red Bull about extending its Formula 1 future beyond 2021, but its situation is complicated by financial pressure on its road car company due to electrification.

Regulatory clampdowns on the number and type of petrol and diesel cars they can sell are changing the business conditions global car manufacturers are facing.

Legislation is forcing them to shift towards electric vehicles, where the investment required is far greater and profit margins are much smaller.

The situation is further complicated by governments worldwide trying to outlaw the sale of new petrol, diesel and hybrid engines cars by 2040 at the latest.

Honda is currently only committed to F1 until the end of next year, after it extended its contract with Red Bull and AlphaTauri by a single season.

It admitted the main issue surrounding its future is not the results it achieves in F1, but how wider issues for the global car market affect its finances.

"We are speaking to Red Bull about the continuation after 2021," Honda's F1 managing director Masashi Yamamoto told Autosport.

"But the other thing we have to consider is the whole car industry is facing a very difficult situation because of electrification.

"Many companies have to invest a lot, so we have to kind of think about the business side and how efficient we can run the programme. That's the point."

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Yamamoto's comments about the impact of regulatory restrictions come weeks after Renault non-executive board member Alain Prost voiced fears about government restrictions on what road car companies could do.

"We even don't know what technology we are going to have in the next 10 years in the automobile industry," he said.

"There's a lot of stupid regulation going on. We're going to kill the automobile industry in Europe.

"It is absolutely stupid."

While the enforced move to electric cars could make Formula E more attractive for manufacturers like Honda in the short term, Yamamoto said F1 remained Honda's priority.

"Obviously we are interested [in FE] and we are continuing and collecting the information," he said.

"But at the moment we just focus on F1 and we don't have any plan to participate in Formula E.

"We have to focus on F1."