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Train to faro, bus/fly to Seville, train to madrid
Chief
I think this is the right play. High speed rail (Alfa Pendular) in Portugal is pretty affordable, should be something like €30 for a 3 hour train ride from Lisbon to Faro
You can fly down to farro, bus to Sevilla (or fly to Malaga and bus from there to Sevilla) and then fly to Madrid as your best bet. Not the most convenient connections but probably cheaper than a car
Chief
From Sevilla, take the Renfe (train) to Madrid. The further in advance you book, the more money you’d likely save.
I always wait until the last minute and end up paying about 80€. Don’t be like me 🙃
We did this: https://www.blablacar.co.uk/
Was recommended this. Looks like a lot of options in the main routes