In CAFE 3, auto companies have wider choices and a better view of the road

Mumbai | New Delhi: India's newly notified CAFE 3 emission norms could alter the direction of automakers' powertrain investments, giving less polluting technologies such as hybrids, plug-in hybrids (PHEVs), range extenders and ethanol-compatible vehicles a bigger role alongside pure EVs.

By allowing multiple clean technologies to earn compliance credits, the norms could prompt automakers to rethink product portfolios and investment plans for the five-year period through March 2032. Non-compliant companies will face debits that can be traded or bought.

"There will be a lot of exercises on scenario planning," said Rajat Mahajan, partner and automotive sector leader at Deloitte, South Asia, adding that OEMs will have to "rethink their product portfolio over the next five years."

The compliance flexibilities could be particularly significant for Tata Motors, Mahindra & Mahindra and Vinfast which have invested heavily in pure battery EVs and largely stayed away from hybrids, said Puneet Gupta, director, S&P Global Mobility. "This will derail their pure BEV ambitions. For European automakers such as Volkswagen-Skoda, Renault and Stellantis, and Korean carmakers such as Hyundai and Kia, the framework could provide another route to meet tighter fleet CO₂ targets without immediately committing to large-scale local EV investments," he said.

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The framework gives the highest super-credit multiplier of 3 to battery EVs and range-extender EVs, while plug-in hybrids/strong hybrids running on flex-fuel ethanol get 2.5, strong hybrids 1.6 and flex-fuel ethanol vehicles 1.1. The multiplier allows one clean vehicle to count as multiple vehicles in calculating a company's fleet average.

The norms also recognise smaller efficiency technologies. Features such as start-stop systems, tyre-pressure monitoring, regenerative braking, LED lighting and efficient air-conditioning can each reduce calculated emissions by 1 gram CO₂/km, subject to a total benefit cap of 9 grams CO₂/km.

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Automakers broadly welcomed the framework. Maruti Suzuki said it recognises "multiple powertrain technologies and fuels", with Rahul Bharti, senior executive officer, corporate affairs, calling the credit/debit mechanism an improvement over CAFE 2.

Shailesh Chandra, MD & CEO, Tata Motors Passenger Vehicles, said the continued recognition of zero-emission technologies reinforces "the critical role of electrification." Mahindra's Velusamy R, president, automotive business, said norms strike a "pragmatic balance" between environmental objectives and what is achievable for industry, and welcomed tech credits, cleaner-fuel benefits and EV super credits.