Nadal, known for his dominance on the clay courts of Roland Garros, is set to retire after the Davis Cup drawing curtains to his remarkable career, which saw him win 22 Grand Slam titles.
The Austrian won a major, the 2020 US Open. He also reached the final of three other Slams, won 17 ATP singles titles; achieved a career-high ATP Ranking of No. 3; and was ensconced in the Top 10 for the better part of six years.
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John McEnroe's side entered the final day of the three-day event in London trailing four-time champions Team Europe 4-8.
Federer is set to play against Serbian Novak Djokovic, Austrian Dominic Thiem and Italian Matteo Berrettini.
The decision implies that Switzerland can no longer qualify for the 24-team event since no other Swiss star is among the top rated singles player list.
Federer ranked third on the ATP rankings, is one of six players to have booked a spot in the ATP Finals.
Playing in front of his home crowd, the 38-year-old played attacking tennis against the 20-year-old, who was going for his fourth title of the season.
If Nadal manages to finish at the top of the rankings by the end of the year, it would be the fifth time that he would achieve the feat in his career, thus tying him with Djokovic, Roger Federer and Jimmy Connors.
