Bureau of Energy Efficiency (BEE) relaxes CAFE-3 emission slopes, steering automakers toward EVs and hybrids

Key facts

• The Bureau of Energy Efficiency (BEE) circulated an updated CAFE-3 draft on 8 April, covering 2027-32 and relaxing the permissible emission slope to 0.00158 for 2027-28 and 0.00131 for 2031-32.
• The relaxed slope grants small cars an 11-13 g per km emission benefit while tightening the target by 10-12 g per km for larger cars.
• Automakers selling higher-emission vehicles will face financial penalties, whereas credits from EVs and strong hybrids can offset these penalties.
• Manufacturers must comply within a three-plus-two year block period—three years (2027-28 to 2029-30) and two years (2030-31 and 2031-32)—with credits or debits carried forward within each block.
• Penalties for non-compliance will be assessed at the end of each block and paid into the Central Energy Conservation Fund, of which 90% will be redistributed to states proportional to vehicle sales and 10% retained by the Centre.