New CAFE-3 norms may impact small car production and prices, ETAuto
People aware of the proposed policy said that since carmakers would be discouraged from manufacturing small cars that meet CAFE-related regulatory norms, the gap in migration of people from two-wheelers to cars could widen.Small car makers may face more regulatory challenges as revised draft of CAFE-3 proposes vehicle improvements fuel efficiency And reducing carbon emissions has been implemented. Those involved in the deliberations said the latest proposed amendments would support larger vehicles, especially electric and hybrid electric vehicles.
with corporate average fuel efficiency With the (CAFE) issue unresolved due to tussle among car manufacturers, the PM’s office has intervened in the matter and involved the petroleum and heavy industries ministries besides the road transport and power ministries to finalize the norms. This is the third draft of CAFE-3 in the last two years.
CAFE refers to government-regulated standards that mandate a minimum average fuel efficiency and the maximum CO2 emissions level for the entire fleet of vehicles sold by a car manufacturer. Instead of examining individual models, it measures a weighted average of all cars produced by a manufacturer.
According to the latest draft of CAFE-3, which has not been released yet, the Bureau of Energy Efficiency (BEE) has proposed to eliminate the humiliation (additional allowance) or relief for small car manufacturers. It has introduced a range-extended electric vehicle (reeve), which will have a volume deviation factor (VDF) of 3, similar to electric cars. VDF is a targeted government measure to promote sales of low-polluting vehicles such as EVs, REEVs and hybrids.
Removing the disincentive for small cars is expected to push up prices of entry-level petrol cars, said people aware of the latest changes. He said REEV has been introduced keeping in mind the current low penetration of EV charging infrastructure, range anxiety among buyers and uncertainty of battery life. There is debate over whether REEVs should be considered equivalent to EVs because, unlike EVs, these vehicles have tailpipe emissions when the engine is running.
People aware of the proposed policy said that since carmakers would be discouraged from manufacturing small cars that meet CAFE-related regulatory norms, the gap in migration of people from two-wheelers to cars could widen. Industry officials said as per the draft norms, the cost of new cars under the proposed CAFE-3 regime will increase by about 10 per cent as carmakers will have to add more fuel-saving technologies to meet the new standards or face penalties.
