Assessing the Viability of Piece-wise Linear Approaches in Addressing the Small Car Market Contraction

Regulatory Paradox in India's CAFE 3 Framework

The proposed CAFE 3 framework in India, aimed at reducing vehicular pollution, has raised concerns about its potential to penalize smaller, more fuel-efficient cars. The weight-based linear formula, designed to reduce overall emissions, could inadvertently create a disproportionate burden on lighter, more affordable vehicles.

The Disadvantage of Small Cars

Under the Bureau of Energy Efficiency (BEE) proposal, a 740 kg hatchback would need to improve efficiency by 48% (from 97 to 51 g CO₂/km), while a 2,500 kg SUV would face only a 25% improvement (from 180 to 135 g CO₂/km). This disparity drew criticism, with the latest BEE draft seeking to correct this by equalizing the stringency at 36% for both small and large cars.

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Scientific Feasibility Concerns

However, the CO₂ target for a 740 kg car under the current draft would fall to 62 grams per kilometre, down from current global best levels of about 88 grams per kilometre. This could effectively penalize relatively less expensive smaller cars that serve as the gateway to car ownership and upward mobility for India's swelling middle class.

Global Standards Provide a Better Approach

In contrast, emission regulations in the United States, European Union, China, South Korea, and Japan incorporate carve-outs that flatten the efficiency curve at the extremes. This approach recognizes thermodynamic and economic realities and creates a "safe harbour" for the lightest and heaviest vehicles, concentrating the steepest improvement demands on the mid-weight segment.

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A Case for a Piece-Wise Linear Model

India's CAFE 3 proposal, with its unbroken linear slope, risks incentivizing manufacturers to upweight vehicles to secure milder emission targets, undermining CAFE's core objective of reducing emissions. A piece-wise linear framework, used by countries like the United States, China, Korea, and Japan, would encourage innovation in powertrain efficiency, lightweight materials, and electrification across segments, providing a more balanced approach to reducing emissions.