Whalesbook
New CO2 Rules Aim for Cleaner Fleets
The proposed Corporate Average Fuel Efficiency (CAFE-III) norms are currently being reviewed by the Prime Minister's Office. They aim to significantly cut overall CO₂ emissions for vehicle fleets to about 91.7 grams per kilometer starting April 2027, with tighter goals expected by FY32. These targets are much more aggressive than CAFE-II's 113 g/km goal and are intended to speed up real emissions cuts across the auto industry.
Generous Hybrid Credits Under Fire
A main concern is the large credits proposed for strong hybrid vehicles. Dr. Singh points out that these vehicles, which combine a petrol engine with electric power, still emit a lot (80-100 g/km). However, current proposals could give them a 2x credit, possibly multiplied further and boosted by a Carbon Neutrality Factor if they use flex-fuel. This system, critics say, makes their compliance figures almost as good as pure electric vehicles (BEVs), even though they have very different real-world environmental impacts. This approach goes against global trends, as China and the European Union are moving to reduce or stop such credits for regular hybrids.
Small Car Exemptions Raise Safety Fears
Another point of contention is the special exemption proposed for vehicles weighing under 909 kg. Automakers warn this could encourage manufacturers to cut corners on safety and vehicle structure to save weight. This works against India's efforts to improve crash safety under the Bharat NCAP program. Companies like Tata Motors, Mahindra & Mahindra, and JSW MG have expressed worries that such concessions could lead to market distortions and safety trade-offs. While a draft from January 2026 updated the compliance curve, critics argue the adjusted weight limit and flatter curve still offer too much leniency.
Hybrids: A Fading Bridge Technology?
Hybrids were once seen as a necessary temporary solution, but their importance is increasingly questioned. With global battery costs falling below $100/kWh, expanding charging infrastructure (over 12,000 stations), and most EVs now offering over 300 km range, the argument for hybrids as a critical intermediate step weakens. Experts suggest that investing heavily in hybrid technology could take money away from building truly electric vehicles. Instead of helping the transition, these hybrids compete with it for consumer attention and investment.
EVs' Green Advantage: Grid vs. Engine
Some argue that EVs aren't truly clean because India relies heavily on coal for power. However, data shows EVs use energy much more efficiently. Pure electric vehicles convert about 90% of electrical energy into movement, compared to less than 25% for petrol engines. Studies of emissions over their lifetime suggest EVs in India produce up to 38% fewer emissions than petrol or diesel cars. This figure is expected to improve further as India's power grid gets cleaner, with over half of its power now coming from non-fossil sources.
Recommendations for True Electrification
Dr. Singh recommends rules that support India's EV goals. This includes removing weight exemptions for small cars, treating hybrids mostly as gasoline cars with very few credits, and not counting flex-fuel or biogas vehicles as zero-emission. Keeping pure electric vehicles as the only zero-emission category is vital to keep investors confident and support the growing battery industry. If these market distortions continue, India could lose five crucial years in its move to cleaner transport.