M&M meets CAFÉ 2 norms for FY24, to comfortably meet CAFÉ 3 norms by 27-28

Amid speculations on how multiple car makers haven’t met the CAFÉ regulations, Mahindra & Mahindra, India’s second-largest SUV maker has stated that the company has met the CAFÉ II targets for FY24, thanks to the contribution of its electric SUV XUV 400 and it will meet the targets for FY25 as well. 

Speaking to the analyst post the Q4 FY24 earnings call, Rajesh Jejurikar, ED and CEO – Automotive and Farm Business at Mahindra & Mahindra said, “In FY24, we clearly met the target. We are fully compliant with the CAFE-II norms in FY24. We expect that to happen with the portfolio of electric cars that we have in FY25 as well. So that's clear.”  

There was speculation that the lower volumes of EVs in its predominant SUV portfolio for Mahindra & Mahindra may pose a challenge for the company to meet its targets, but the company has ‘cleared the air’ with the analyst fraternity. 

On the upcoming CAFE-III norms – Jejurikar says they are “still under discussion.” 
On the thought process behind CAFÉ norms for the future, Jejurikar says the way M&M understands the norms, “the mindset right now is to create CAFE norms, which encourages companies to have a very high portfolio of electric cars. It is being designed in a way that literally discourage non-electric (cars). The direction of the conversation right now is to move OEMs, and push them to have EVs because that's the only way to meet the CAFE norms.”

M&M believes that a higher share of diesel vehicles puts Mahindra in a more  favourable position versus gasoline. 

“Little counterintuitive as we may sound and having a chat with R Velusamy (head of R&D) on this, his understanding is that actually diesel for us is more favorable in terms of compliance with CAFE norms than gasoline. We don't see a worry between diesel and gasoline. But with the plans we have for electric cars, by the time we get to the CAFE-III in FY27- 28, we should be very comfortable with our EV plans because we are very invested in EVs,” assured Jejurikar. 

M&M has committed to invest Rs 27,000 crore in the coming five to seven years in its automotive business, which envisages the company having a portfolio of 9 internal combustion engine SUVs and 7 electric vehicles, which is a fair mix of a cleaner vehicle portfolio. 

When queried on what the bare minimum EV penetration that required for M&M's portfolio to meet the upcoming CAFÉ III targets will be, he said, “I think it's a hard number to calculate right now. It depends on what the rest of your mix is, but our guess is 15% to 25%.”  The company has guided for a penetration of 20-30% electric vehicles by 2027.