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Business News›Industry›Auto›Auto News›In CAFE 3, auto companies have wider choices and a better view of the road

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

India's new CAFE 3 emission norms are set to reshape automakers' investment strategies by promoting cleaner technologies alongside electric vehicles. These regulations introduce a credit system for various powertrains, encouraging firms to rethink their portfolios and investments through March 2032. This shift could impact companies heavily invested in battery EVs, offering a broader compliance path for others.

IANS

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.



Also Read | CAFE III fuel efficiency norms notified for cars: 3x credit for battery EVs, no special benefit for small cars

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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