The central government has issued new norms for Corporate Average Fuel Economy i.e. CAFE-3 for passenger vehicles. These rules will be applicable from 1 April 2027 to 31 March 2032. Under this, car companies have to keep the average fuel efficiency and carbon emissions of all their passenger cars within the prescribed limits. These rules will not only affect petrol and diesel cars. Electric, hybrid and other alternative fuel vehicles will also be in its purview.

The government has also changed the way it sets fuel efficiency targets for cars of different weights. At the same time, super credit will be given to companies to promote clean technologies such as EVs and hybrids. This means that the sale of such vehicles will benefit companies in meeting their average emission targets.

Due to the new regulations, car companies may have to change their car designs, technology and entire product portfolio in the coming year. According to a PTI report, these regulations are aimed at reducing fuel consumption and promoting the country’s energy security and sustainable transport.

Which cars will CAFE-3 regulations apply to?

CAFE-3 regulations will apply to passenger vehicles. Which includes cars like hatchback, sedan MPV and SUV. Apart from the driver, a maximum of 8 people can sit in such vehicles. New passenger cars manufactured for sale in India or imported from other countries will come under these rules.

Small cars do not get special discount

The draft CAFE-3 proposed to give special exemption to petrol cars weighing less than 909 kg. It was aimed at not putting too much pressure on the prices of small and cheap cars. But this exemption has been removed in the final regulations. That means small cars are not kept out of CAFE-3.

The new rules also keep the target line straighter than before. This would make targets comparatively easier for lighter cars, while more stringent for heavier cars.

Reference weight also increased

In CAFE-3, the reference weight has been increased from 1,082 kg to 1,229 kg. That is, there has been an increase of about 13.6%. The change has been made because the average weight of passenger cars sold in India has increased over the past few years.

Fuel efficiency has to improve by 16.7% by 2031-32

Under CAFE-3, fuel efficiency targets for companies will become slightly stricter each year. In 2027-28, the benchmark is set at 3.996 liters per 100 km. At the same time, it will come down to 3.3273 liters per 100 km by 2031-32. This means that a target of around 16.7% improvement in fuel efficiency has been set over five years.

EV and hybrid cars will get super credit

To promote clean and alternative fuel vehicles, the government has made provision for super credit in CAFE-3. Battery electric vehicles (BEV), range-extended EVs, plug-in hybrids, strong hybrids and flex-fuel vehicles will benefit from this.

The sale of these vehicles will provide additional assistance to companies in achieving their overall fleet average emission targets. This means that selling cars with cleaner technology will make it easier for companies to meet CAFE-3 targets.

Companies will also be able to deposit and purchase credit

CAFE-3 also has a credit-debit system. If a company performs better than the set target, it will get additional credit. The company can use this credit further.

At the same time, if a company is not able to meet its target, it will have some options. It can use already accumulated credit or buy credit from other companies. Apart from this, companies will also be able to get the required credit through the procurement program managed by the Bureau of Energy Efficiency (BEE).

New technology in cars will get a boost

CAFE-3 doesn’t just focus on engines and fuel. Many other technologies that improve fuel efficiency will also be promoted. These include technologies such as solar-reflective paint, advanced glazing and more efficient air conditioning systems.

According to the government, the new CAFE-3 rules are designed to keep in mind the growing number of electric cars, the availability of alternative and renewable fuels and the rapidly changing technology in the automobile sector. Overall, after the implementation of CAFE-3, it will not be enough for car companies to just sell more cars. They also have to ensure that the average fuel efficiency and emissions of their entire car range remain within the prescribed limits.

Don’t dismiss this hatchback as cheap, it has earned 5 stars in safety.