Explained: Corporate Average Fuel Efficiency(CAFE) & how its calculated

While BS6 norms limit the emissions of pollutants like hydrocarbons, sulphur and oxides of nitrogen, CAFE norms deal with overall fuel consumption, specifically the quantity of fuel consumed.

BHPian 84.monsoon recently shared this with other enthusiasts.

CAFE stands for Corporate Average Fuel Efficiency/Economy, so it is not the emission and economy of the individual models that are considered, but the weighted average of emissions and economy for the entire fleet sold in the country. This means, as a manufacturer I can very well sell heavy, highly polluting and fuel-efficient cars, but then I will have to make that up by selling huge volumes of much more efficient and light cars.

While BS6 norms limit the emissions of pollutants like hydrocarbons, sulphur and oxides of nitrogen, CAFE norms deal with overall fuel consumption, specifically the quantity of fuel consumed. Fuel consumption is typically proportional to the fuel efficiency and the weight of the car.

So how is the CAFE target of each manufacturer calculated? There are 3 steps.

Step 1: Derive the corporate average curb weight for the manufacturer. This is:

{(Number of cars sold in model 1 * Kerb weight of model 1) + (Number of cars sold in model 2 * Kerb weight of model 2)+....}

Divided by:

(total number of cars sold across models)

Note that the number of cars sold in each model makes a big difference. If X1 is the largest selling model of BMW, it will have a big weight in the calculation of the average kerb weight. The lighter it is, the more this will pull down the average kerb weight and be an advantage for the manufacturer in meeting the CAFE norm. Now the important point is, while the BMW India by itself cannot dictate the weight of each variant/powertrain of X1, it can influence the variant selected for sales in India. By opting for the 18i and 18d, BMW India gets to import the lightest available variant of X1 due to the smaller and lighter engines, and therefore helps achieve a lower weighted average kerb weight.

Step 2: Scale the industry average target to the weighted average kerb weight of the manufacturer to get the manufacturer specific CO2 target.

The regulator then establishes a industry wide average kerb weight by combining all manufacturers together. This is then reduced to set the CAFE 1 and CAFE 2 targets. The industry-average kerb weight of 1145 KG for India has been derived for CAFE Phase 2 and a CO2 emission target is set for this kerb weight as 113 gm/KM. Manufacturers are then scaled in a linear way based on the weighted average kerb weight of their particular fleet calculated in step 1 above. So, a manufacturer who makes a fleet of cars with an average kerb weight of 1145 KG has to make sure that the weighted average emission of their entire fleet is no more than 113 gm/KM. If they sell some gas guzzlers at one end of the spectrum, they will have to offset by selling many more smaller and lighter cars on the other end of the spectrum to offset that and bring the average back to 113 gm/KM.

Manufacturer CAFE target = (Industry wide target * Manufacturer's weighted average kerb weight from step 1 above)

Divided by:

(Industry average kerb weight)

Step 3: Calculate the real achieved CAFE of the manufacturer each year based on the weighted average of the cars sold across their fleet and the CO2 emissions of each model.

{(Number of Cars for Variant 1 sold * CO2 emission of variant 1) + (Number of Cars for Variant 2 sold * CO2 emission of variant 2) + .....}

Divided by:

Total number of all cars sold.

The real achieved CAFE in step 3 has to be lower than or equal to the target derived in step 2 to achieve compliance to CAFE 2 norms.

BMW received an average kerb weight of 1712 KG based on their fleet composition and relative sales of each model in step 1. So by scaling the CO2 target to the 113 gm/KM in a linear way to its kerb weight number, it received a target of 140 gm/KM for CO2. Now, they will have to make sure their real world sales of each model/variant across the spectrum results in an overall emission as in step 3, below 140 gm/KM! Plus, they will have to make sure they achieve this every year!

Now this is quite a significant stretch from their current average which is is around 160 gm/KM. So what can they do to achieve the target in an ongoing basis? Emissions per model/variant are what they are - these are determined by the global design & engineering of the cars. There is no control BMW India will have on the emissions per specific variants. So, few of the things BMW can do to influence their achieved CAFE:

Decrease the weight of the fast selling models by opting for variants that are lighter and have smaller engines. This is the driver behind opting for the 118i and 118d variant of the X1. Selling these variants in good numbers will allow BMW to get enough headroom to sell niche high priced performance models like M3 and M4 that will drag the corporate average emissions significantly higher for each additional car sold.

Increase the weight of mid-rung models that sell in reasonable numbers so that the average kerb weight goes up but the CO2 target also goes up somewhat. They cannot overdo this, as a heavier car may create more emissions and this will then incase the numerator. The 3 Series LWB only choice is a direct result of how good an opportunity there is in this segment. The LWB weighs more than the standard 3 series by a good margin, but does not increase emissions by a corresponding amount due to the way these engines are tuned. The 330LD LCI emits just 135 gm/KM of CO2. The pre-LCI 320D regular wheelbase emitted 127 gm/KM. The weight increase advantage is probably outweighing the emission increase disadvantage.

Decrease the number of cars that do not contribute enough volumes and revenues; do not significantly increase the average kerb weight but yet drag the emissions disproportionately higher.

Play a pricing game - peg the prices of the top end marquee variants that will sell irrespective of how high they are priced (think 7 series) and subsidize the baby darlings like X1 that will pull down the CAFE number overall by selling them at higher volumes.

Last but not least, increase EVs and hybrids in the lineup, as they will significantly bring down the overall CO2 emissions - this is the one thing the government is trying to push the carmakers to do the most, but all the above bullets are unintended consequences of the way CAFE norms are defined and measured.

Image Source: Autocar India

Check out BHPian comments for more insights and information.

A helmet will save your life