If you are planning to buy a new car in the near future, there may be good news for you. The prices of electric cars are expected to come down in the next few years and the mileage of petrol-diesel cars is expected to increase. The main reason for this is the new CAFE-3 norms implemented by the central government for passenger cars. The rules of CAFE-3 i.e. (Corporate Average Fuel Economy) will come into effect from April 1, 2027 and will remain in effect till March 31, 2032. Their direct aim is to encourage car companies to produce vehicles that consume less fuel and pollute less.

Following the new rules, companies will have to increase the number of high mileage petrol-diesel cars along with electric and hybrid models across their car portfolio. Its impact can also be seen on the cars available to consumers and their prices.

Competition between companies for affordable EVs could increase

Electric and other low-emission vehicles are given special benefits in CAFE-3. Sales of EVs and hybrid cars will help companies meet their average emission targets. In such a situation, the need for companies to sell more and more electric cars will increase.

This could mean that car companies will launch more budget and affordable EVs in the market in the coming year. If competition for affordable electric cars increases among companies like Tata, Mahindra, Hyundai, Maruti and MG, competition on prices may also be seen. This can benefit customers who want to buy an EV on a low budget.

What has changed in CAFE-2 and CAFE-3?

CAFE-2 rules are currently in place, effective from April 2022. In these rules, no decision is made based on the mileage of any single car. The overall average performance of the cars sold by the company in a year is considered. The weight of the car also plays an important role in this. Generally, the heavier the vehicle, the more fuel it will cost to operate. Therefore, under CAFE-2, an average weight of 1,082 kg has been taken as basis.

Based on this, companies have been given a target to maintain an average mileage of 20.92 km/litre for their entire fleet of cars. Also, the average carbon emissions from these vehicles should not exceed 113 grams per kilometer. Now in CAFE-3 these targets are being made more stringent.

25 km/l mileage target from 2027

Under the new rules, companies will have to reduce the average carbon emissions of their vehicles to 91.7 grams per kilometer between 2027 and 2032. The current limit is 113 grams per kilometer. That means companies will have to reduce emissions by about 19 percent. In 2027, companies will aim to have an average fleet mileage of at least 25 km/litre. After this, the rules will become stricter every year and the target is set to bring this average down to around 30 km/l by 2031-32.

One thing to note is that this does not mean that every car of the company has to give a mileage of 30 km/l. The rules will apply on an average of all vehicles sold by the company.

EVs and hybrids will get super credit

CAFE-3 also provides for ‘super credit’ for companies to sell cleaner and less polluting vehicles. If you understand in simple language, the sale of certain special vehicles will get more credit than normal cars.

3 times credit will be available for pure electric cars i.e. EVs. To give you an example, if a company sells 10,000 EVs, it may count as 30,000 vehicles in government calculations. Plug-in hybrid and flex-fuel hybrid cars will get 2.5 times the credit. Strong hybrids will be given 1.6 times the credit and flex-fuel cars will be given 1.1 times the credit. With this system, it will be easier for companies to achieve their average emission and mileage targets.

New technology will also come in petrol and diesel cars

CAFE-3 doesn’t mean companies have to focus only on EVs. Companies can also achieve emission targets by using new technologies in petrol and diesel cars. Under the rules, companies can get up to 9 grams per kilometer off the carbon emissions target by using some modern technologies.

These technologies include an engine start-stop system, which shuts off the engine when the vehicle is stopped in traffic and restarts it as soon as it starts moving. This saves fuel. Apart from this, technologies like TPMS i.e. Tire Pressure Monitoring System, regenerative braking, gearbox with 6 or more speeds, 12V or 48V alternator and motor-generator are also included.

Technologies such as LED lights, better glazing, electric water pumps, more efficient AC, solar-reflective paint and smart radiator fans can also be used in the car. Their purpose is to reduce vehicle energy consumption and reduce unnecessary load on the engine.

How do CAFE rules work?

The full name of CAFE is Corporate Average Fuel Economy. If we understand it in simple language, it is a rule related to the average mileage and emissions of the entire portfolio of a car company. The government does not look at a single car and decide whether a company has met the rules or not. The average is calculated by combining all small cars, SUVs, petrol-diesel models, hybrids and EVs sold by the company in a year.

That is, if a company’s large SUV gives low mileage, it is not necessarily breaking the rules. The company can achieve the target if the same company’s other small cars, hybrids and EVs perform better and the average of the entire portfolio stays within the government-set norms.

Thus, CAFE-3 will not only affect electric cars. Companies have to work on multiple fronts simultaneously. They will have to make petrol-diesel cars with better mileage, increase sales of hybrids and EVs and use new technologies. In the coming year, its impact can be seen on technology, model range and car prices as well.

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