BEE Eyes Stricter CAFE 3 Norms After 6 Carmakers Meet Fuel Efficiency Targets

The Bureau of Energy Efficiency (BEE) has compiled data showing that 6 major carmakers satisfied the Corporate Average Fuel Efficiency 2 (CAFE 2) limits for FY24 and FY25, prompting consideration of stricter CAFE 3 standards. 

6 Carmakers Meet CAFE 2 

Hyundai Motor India and Kia India barely met their fleet‑average limits in both years. Maruti Suzuki, Mahindra & Mahindra, Toyota Kirloskar Motor and Tata Motors Passenger Vehicles posted emissions well below their respective targets, creating sizable cushions. 

Maruti Suzuki’s fleet emitted 103.635 gm/km in FY24 against a target of 109.185 gm/km and 101.389 gm/km in FY25 versus a target of 110.076 gm/km. Tata Motors Passenger Vehicles recorded 95.119 gm/km in FY24 versus a target of 119.722 gm/km and 96.852 gm/km in FY25 against a target of 120.939 gm/km, the widest gap among the 6. 

Individual Emission Gaps Explained 

Under the block based approach, BEE sets a single industry benchmark for each 5-year block – 130 gm/km for CAFE 1 (FY17‑22) and 113 gm/km for CAFE 2 (FY23‑27). Individual annual targets are derived from that benchmark using a formula linked to average kerb weight of vehicles sold. 

Kerb weight has risen modestly for several manufacturers, lifting their annual targets slightly. Tata Motors attributes the increase to safety upgrades that add weight without compromising fuel efficiency. 

Read More: India’s Ethanol Boom Hits a Speed Bump: 20 Billion Litres of Capacity vs 11 Billion Litres of E20 Demand! 

BEE Proposes CAFE 3 

BEE officials indicated that the widening gap between targets and actual emissions under CAFE 2 suggests the sector can absorb tighter limits. For CAFE 3, scheduled between FY28 and FY32, BEE is considering moving away from a single block target to yearly caps that tighten from 92.5 gm/km to 77.08 gm/km. 

This annual tightening would make company‑specific targets progressively stricter, a shift from the relatively stable annual targets of CAFE 2. 

Industry Views on Targets 

The Society of Indian Automobile Manufacturers has urged BEE to retain a single 5-year industry target of 89.6 gm/km for CAFE 3, citing regulatory certainty. Tata Motors and Hyundai Motor India have echoed this preference, noting that annual escalations could be challenging given varied investment cycles. 

Both firms stress that they are well positioned for compliance but prefer a clear, single benchmark to guide long term planning. 

Conclusion 

In conclusion, 6 Indian carmakers have met or exceeded CAFE 2 emission limits for FY24 and FY25. BEE is now evaluating a shift to annually tightening CAFE 3 targets, while the industry favours a single 5-year ceiling to ensure consistent compliance. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.