Darren Osborne, 48, told a jury that there would be "one less terrorist off our streets" if he killed the Labour leader and that killing Mr Khan, the mayor of London, would be like "winning the lottery".
Darren Osborne, from Cardiff, is accused of deliberately mowing down Muslims outside two mosques in north London on June 19 past year.
Taking the stand at Woolwich Crown Court in southeast London, Osborne claimed he had plotted with two men called Terry Jones and Dave to "plough through as many" people as possible at a pro-Palestinian march.
However, the Woolwich Crown Court had heard evidence that Osborne had acted alone.
Osborne, from Cardiff, denies the murder of Mr Ali, 51, and attempted murder.
He said the group decided instead to target the Al Quds march adding: "We just wanted more casualties". "Were you hoping Jeremy Corbyn was going to be there?"
Asked whether he wanted to kill Mr Corbyn, who did not attend last year's event, Mr Osborne replied: "Oh, yeah".
Osborne also claimed that the van he rammed into the Finsbury Mosque worshippers was driven by another person called "Dave", adding that he did not understand why he left the scene.
He said he was prepared to die in the planned atrocity and believed he "might get shot by police or lynched".
Osborne denied he was the driver of the van when it later collided with worshippers in Finsbury Park, north London, and claimed he had been removing his pants in the footwell of the passenger side while the attack was carried out.
The gathering later consented to meet in Finsbury Park, where he thought they were going to "regroup", he told the court.
He said: "I was up for an attack that day but when we got to Finsbury Park I was just so exhausted, I sort of lost my nerve".
Giving evidence on Tuesday, Darren Osborne claimed he picked up another man, whom he named only as "Dave", as he drove round the area.
Osborne says: "No. I've had a couple of pints, yeah".
"The truth being that Dave was the driver?" asked Mr Rees.
Body worn footage of PC David Jones, who arrested Osborne and escorted him to the back of the police van after the attack was played to the jury at the close of the prosecution case today.
Osborne told the court: 'It would have been like winning the lottery'.
He earlier denied he was the driver of the van - and alleged it was a man he "met in the pub".
Osborne responds: "No, I'm flying solo".
The court heard Mr Osborne replied: "No".
But Osborne said they soon changed their minds.
Two iPhone 6s and an iPad Air recovered from Osborne revealed he had been sent a direct message from Jayda Fransen, deputy leader of Britain First two weeks before the incident.
Mr Osborne claimed he chose to abruptly submit the defence statement on Friday after "a lot of soul-searching".
But Mr Rees argued Dave and Terry were totally fabricated in order to deflect responsibility for the attack.
The defendant repeated the phrase "I have no explanation" during questioning, occasionally smiling and laughing.