CAFE III Norms: How Strong Hybrid Cars Can Play a Bigger Role in India’s Automotive Future

The new Corporate Average Fuel Economy (CAFE III) rules will come into effect from April 1, 2027, and will remain applicable until March 31, 2032. During this period, the fuel-consumption benchmark will become progressively stricter.

CAFE norms measure the average fuel consumption of a carmaker's eligible passenger-vehicle fleet, rather than judging every model individually. Under CAFE III, the benchmark is set to move from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32. This represents an improvement of around 16.7% over five years.

This means automakers will have to pay closer attention to the overall mix of vehicles they sell. A manufacturer with a large number of petrol or diesel vehicles could improve its fleet-average efficiency by increasing sales of vehicles with more efficient powertrains.

This is where strong hybrid technology becomes important. A strong hybrid combines a petrol engine with an electric motor and battery. Unlike a mild-hybrid system, the electric motor in a strong hybrid can drive the car on its own in certain situations. The system can also recover energy while braking and use it later to reduce the load on the engine.

For buyers, this can mean lower fuel consumption without depending on external charging infrastructure. For manufacturers, strong hybrids offer another way to improve fleet efficiency while continuing to sell internal-combustion engine vehicles.

The CAFE III framework uses multipliers for different electrified powertrains. Strong hybrid electric vehicles get a 1.6 multiplier, while certain plug-in hybrids and strong hybrids using flex fuel can receive a higher multiplier.

Despite the potential benefit for hybrids, CAFE III should not be viewed as a policy designed specifically to promote strong hybrids. Battery electric vehicles receive a 3.0 multiplier, which is significantly higher than the 1.6 multiplier for strong hybrids. This gives EVs a larger benefit in the fleet-efficiency calculation.

The framework therefore continues to provide a strong regulatory incentive for automakers to increase EV sales. However, India's EV adoption is still different across vehicle segments and markets. Purchase prices, charging infrastructure and driving patterns remain important considerations for consumers. This leaves room for technologies such as strong hybrids that can deliver improved fuel efficiency without requiring a complete shift to charging-based mobility.

Strong hybrids have moved beyond the experimental stage in India's passenger-vehicle market. Models such as the Toyota Innova Hycross, Toyota Urban Cruiser Hyryder, Maruti Suzuki Grand Vitara and Maruti Suzuki Victoris have brought hybrid technology to different segments.

The Innova Hycross has also established itself as one of the key strong-hybrid models in the market, while the Hyryder has continued to attract buyers. The entry of the Victoris has further expanded Maruti Suzuki's hybrid offering. This existing customer base could make it easier for automakers to expand hybrid portfolios as CAFE III targets become more demanding.

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However, strong hybrids still face one major hurdle - cost. A hybrid powertrain combines an internal-combustion engine with an electric motor, battery and complex electronic control systems. This generally makes the vehicle more expensive than an equivalent petrol model.

For buyers who drive relatively few kilometres every year, the fuel savings may not be enough to recover the additional upfront cost. The equation can be different for high-mileage users, particularly those driving frequently in cities. Hybrid systems can make greater use of electric propulsion and regenerative braking in stop-and-go traffic, potentially improving fuel efficiency.

CAFE III is unlikely to make strong hybrids a replacement for EVs. Instead, the new norms could encourage automakers to use multiple powertrain technologies at the same time. EVs will continue to receive the highest multiplier, while strong hybrids can help manufacturers improve efficiency across segments where petrol vehicles remain important.

For carmakers, this could make hybrids a useful bridge as India gradually moves towards greater electrification.

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Consumers who are not yet ready to switch to an EV could still have access to a more fuel-efficient alternative. CAFE III may not have been created specifically to support strong hybrids, but its stricter fleet-efficiency targets could give the technology a more important role in India's car market over the next few years.