Car buyers may see a big change in the coming times. The central government has set CAFE-3 rules for passenger vehicles, which will be applicable from April 1, 2027 to March 31, 2032. The objective of these rules is to increase the fuel efficiency of cars and reduce carbon emissions. Due to this, companies will have to focus more on high mileage petrol-diesel cars as well as EV and hybrid models in their portfolio. This may increase the number of affordable EV models in the coming years. However, how low EV prices actually go will depend on companies' costs, battery prices, competition and market demand.
What will change in CAFE-3 after CAFE-2?
CAFE i.e. Corporate Average Fuel Economy rules do not apply to the mileage of any one car. The government takes into account the average performance of all passenger vehicles sold by the company in a year. The existing CAFE-2 rules are applicable from April 2022. In this, the target is set on the basis of average weight, fuel consumption and CO₂ emissions of the company's entire vehicle portfolio. Now under CAFE-3, the emission target is being made more stringent for the companies.
Target to reduce pollution by 2032
Under CAFE-3, companies will have to reduce the average CO₂ emissions of their passenger vehicle fleet to about 91.7 grams per kilometer between 2027 and 2032.
The current level is said to be around 113 grams per kilometer. This means that companies will have to reduce their average emissions significantly.
Additionally, fuel efficiency targets will also be tightened in a phased manner. The average mileage target will start from around 25 km/l in 2027 and move towards reaching around 30 km/l by 2031-32.
This does not mean that every car of the company will have to give a mileage of 30 km/litre. The rules apply to the average of the company's total sales.
EV and hybrid cars will get super-credit
To promote low-emission vehicles, a provision for super-credit has been made in CAFE-3.
That is, the more low-emission vehicles the company sells, the more it will help it meet its corporate average target.
As per the stated credits:
- Pure EV: 3x credit
- Plug-in hybrid and flex-fuel hybrid: 2.5 times
- Strong Hybrid: 1.6 times
- Flex-fuel car: 1.1 times
For example, if a company has 10,000 EV sales and the 3x credit is applicable, its contribution in calculating the rules may be considered equal to 30,000 units.
Use of technology in petrol and diesel cars also
CAFE-3 is not just about selling EVs. Companies can also improve fuel efficiency by using new technology in petrol and diesel cars.
For this, several techniques have been taken into account, such as:
- Engine Start-Stop System — Engine automatically shuts off in traffic and starts when needed.
- TPMS — helps maintain proper tire air pressure.
- Regenerative braking — storing the energy generated by braking in the battery.
- 6-speed or higher gearboxes — help improve engine efficiency.
- 12V/48V System — Increasing the efficiency of electrical systems.
- Motor-generator – To provide additional power support to the engine.
- LED lights — low power consumption.
- Advanced glazing — helps reduce cabin heat.
- Electric water pump — to reduce excess load on the engine.
- High-Efficiency AC — Better cooling with less energy.
- Solar-reflective paint — helps prevent the car cabin from overheating.
- Smart radiator fan — controlling fan speed as per need.
Through these technologies, companies can improve the fuel efficiency and emission performance of their vehicles.
What will be the impact on the common car buyer?
CAFE-3 may have the biggest impact on the strategy and model lineup of car companies.
Along with increasing the sales of low-emission cars, companies will have to improve the efficiency of petrol-diesel models. Therefore, in the coming years, more EV, hybrid and better mileage cars can be seen in the market. As competition increases among companies in the EV segment, new and affordable models are likely to come, but on the basis of these rules, it cannot be decided how cheap a particular company's car will be.
What are the CAFE rules after all?
If you understand in simple language, CAFE is the report card of the entire car portfolio of a company. If the company sells all types of vehicles in a year – small petrol car, big SUV, hybrid and EV, then the government looks at the average performance of the company by combining their sales. Therefore, it is not necessary that every car of the company meets the CAFE target separately. The real focus is on the average mileage and CO₂ emissions of the company's total sales. This means that in the coming years, the focus of the car market may increase not only on power and features, but also on mileage, hybrid technology and electrification.