India’s automotive industry is on the brink of a transformative shift as it prepares to comply with the stringent Corporate Average Fuel Efficiency (CAFÉ) norms set to roll out in April 2027. These new regulations, part of CAFÉ phase 3, mandate a near 20% reduction in carbon dioxide emissions, compelling automakers to accelerate their adoption of electric vehicles (EVs) or face substantial penalties.
Under the current CAFÉ phase 2, automakers can meet regulatory standards by integrating compressed natural gas (CNG) and hybrid vehicles into their fleets. However, CAFÉ phase 3 is designed to significantly discourage the sale of non-electric vehicles, pushing the industry towards a more electric-centric future. The impending regulations have prompted automakers across the board to pivot towards electric mobility. Companies such as Tata Motors, Mahindra & Mahindra, and Skoda Auto Volkswagen are already investing heavily in pure EVs, recognizing the inevitability of transitioning away from traditional internal combustion engines. In contrast, manufacturers like Maruti Suzuki and Toyota Kirloskar, who currently lack EVs in their portfolios, are focusing on hybrid models as an interim solution. According to industry experts, including the Managing Director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, compliance with CAFÉ phase 3 without substantial EV integration will be exceedingly challenging. This sentiment underscores the regulatory push towards electric vehicles, with hybrids and other alternative technologies unable to meet the stringent emission targets set forth by the government.
The Bureau of Energy Efficiency (BEE), responsible for finalizing the CAFÉ phase 3 and subsequent CAFÉ phase 4 norms, has invited stakeholder feedback to refine these regulations. The new norms aim to align India’s automotive emission standards with global benchmarks, mirroring regulations in the European Union aimed at reducing CO2 emissions to 91.7 grams per kilometer for CAFÉ phase 3 and 70 grams per kilometer for CAFÉ phase 4. Industry leaders believe these new norms will not only drive technological innovation but also position India’s automotive sector on par with international standards. As automakers prepare for the electric future mandated by CAFÉ phase 3, the industry anticipates a paradigm shift towards sustainable mobility solutions that align with India’s environmental goals and global competitiveness. This transition is expected to redefine the landscape of India’s automotive industry, promoting cleaner technologies and enhancing the country’s position as a leader in sustainable mobility solutions.
