JSW Motors CEO Ranjan Nayak said CAFE-3, starting from April next year, helps the company plan products and investments with clarity. He said, "CAFE-3 provides greater regulatory certainty, which is important for companies like JSW Motors." The firm now focuses on New Energy Vehicles to support India’s cleaner mobility transition.
JSW Motors has said CAFE-3, that kicks in from April next year, would allow it to plan its products, technologies, investments and localisation efforts with greater clarity.
In an exclusive interview with businessline, Ranjan Nayak, Chief Executive Officer, JSW Motors said that the next phase of India's automotive transition will require original equipment manufacturers (OEMs) to take a broader view of mobility, and it will require alignment across vehicle technology, charging infrastructure, battery manufacturing, renewable power and consumer adoption.
Here are the edited excerpts of the interview:
In what ways will the CAFE-3 fuel efficiency guidelines help new entrants like JSW Motors plan their product strategy??
CAFE-3 provides greater regulatory certainty, which is important for companies like JSW Motors as we build our product and technology roadmap for the coming years. The 3+2-year compliance block structure gives companies greater flexibility to align their sales and powertrain strategies with the stipulated CAFE targets.
The recognition of multiple electrified powertrains also gives us greater clarity on where to focus investments and technology development. For JSW Motors, this is particularly relevant as we are already working towards launching clean technologies across New Energy Vehicles (NEVs). The framework allows us to plan our products, technologies, investments and localisation efforts with greater clarity.
What specific technologies would you leverage to maximize regulatory benefits under these norms?
Our approach is centred on a portfolio of NEVs, including Range-Extended Electric Vehicles (REEVs) and Plug-in Hybrid Electric Vehicles (PHEVs). Each technology addresses a different consumer need and can play a role in India's transition towards cleaner mobility. NEVs are particularly suited to consumers with convenient access to charging.
REEVs use electric motors for propulsion while a range-extending engine generates electricity when required, offering an alternative for consumers concerned about charging access and long-distance travel. PHEVs combine external charging and electric driving capability with an internal-combustion engine, providing flexibility for both urban and inter-city use.
We particularly welcome the higher volume derogation factor for NEVs and REEVs, followed by PHEVs and eligible strong hybrids, as this recognises the greater contribution of New Energy Vehicles while allowing different electrified powertrains to contribute to the transition.
What would be your localisation levels for these technologies?
Our objective is to progressively build a more localised new energy vehicle ecosystem in line with the broader goals of Atmanirbhar Bharat and Viksit Bharat. As battery manufacturing scales, greater localisation across the electric mobility value chain can strengthen domestic supply chains and reduce import dependence for critical technologies over time. CAFE-3 further strengthens the case for such investments across the industry.
The government has laid out the path now, so what should original equipment manufacturers (OEMs) do to meet carbon neutrality while keeping affordability for customers in mind?
The next phase of India's automotive transition will require OEMs to take a broader view of mobility. It will require alignment across vehicle technology, charging infrastructure, battery manufacturing, renewable power and consumer adoption.
For OEMs, the focus should be on bringing cleaner and increasingly efficient technologies to consumers while recognising that different powertrains address different consumer needs. Affordability and adoption will ultimately depend on how effectively the industry can develop and localise these technologies and make them relevant for Indian consumers. CAFE-3 provides the regulatory foundation for this transition.
The industry now needs to translate that framework into sustained investment, innovation and greater consumer adoption of cleaner mobility technologies.
Why is NEV approach important for India's mobility transition?
A new energy vehicle approach can have an impact well beyond the vehicle itself. Greater adoption of NEV technologies can create demand for domestic battery manufacturing, components, power electronics and associated technologies.
India has already taken steps in this direction through the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cells, which aims to establish large-scale domestic battery manufacturing with increasing domestic value addition. For India, this creates an opportunity to build capabilities across cells, packs, materials and other components, strengthen domestic supply chains and support a more self-reliant mobility ecosystem.
How important is the provision for pooling and trading of CAFE compliance credits?
The provision provides manufacturers with greater flexibility in meeting CAFE targets. A mechanism through which manufacturers can exchange credits can also create an economic incentive for companies investing in cleaner and more efficient technologies. For a company such as JSW Motors, which is investing in NEV technology, this provides another element of flexibility as we build our product and powertrain strategy.
Can CAFE-3 help India reduce its dependence on imported fossil fuels?
Reducing petrol and diesel consumption in road transport has implications beyond emissions. Greater electrification of passenger mobility can help reduce exposure to international oil price shocks and reduce the country's dependence on imported fossil fuels.
The larger opportunity is to build a passenger vehicle ecosystem that is increasingly electrified, technologically advanced and domestically anchored. This can support cleaner mobility while strengthening India's energy security and reducing dependence on imported fossil fuels.
What will be critical to making this transition successful?
The transition will require continued collaboration and dialogue between policymakers and auto and technology companies. CAFE-3 provides an important regulatory foundation, but the next phase will require alignment across vehicle technologies, charging infrastructure, battery manufacturing, renewable power and consumer adoption.
The objective should be to translate the framework into sustained investment, innovation, localisation and greater consumer adoption of cleaner mobility technologies.