CAFE III fuel efficiency norms: TMPV, M&M may emerge as key beneficiaries
It estimated EV penetration of 1-3 per cent for Maruti Suzuki India Ltd, 4-7 per cent for Hyundai Motor India Ltd, 4-7 per cent for TMPV, and 13-15 per cent for Mahindra & Mahindra
- Oct 1, 2026,
- Updated Oct 1, 2026 1:34 PM IST
With the government notifying CAFE 2027 norms, with no material changes from the July 2026 draft, foreign brokerage Nomura believes most original equipment manufacturers (OEMs) can meet FY28 CAFE requirements with relatively moderate EV penetration. It estimated EV penetration of 1-3 per cent for Maruti Suzuki India Ltd (MSIL), 4-7 per cent for Hyundai Motor India Ltd, 4-7 per cent for Tata Motor Passenger Vehicle Ltd (TMPV), and 13-15 per cent for Mahindra & Mahindra (M&M).
As the targets tighten, the foreign brokerage expects the required EV mix will rise further by around 1-2 percentage points annually over the next five years.
Nomura said companies with a higher EV salience in their portfolios are likely to gain market share as rising EV penetration and tightening CAFE requirements should increasingly favour OEMs that have already established a faster electrification pathway.
"We expect TMPV, M&M to emerge as key beneficiaries in case EV penetration rises faster. Hyundai India also has the potential to gain share in the future, with its upcoming mass market EV (Jan-27) and considering its parent HMC’s competence in EVs," Nomura said.
For Maruti Suzuki India Ltd (MSIL), the final CAFE framework should be relatively easier to achieve, although removal of the small-car concession and lower strong-hybrid credit reduces the benefit, Nomura said.
"MSIL is also developing a range-extender hybrid (link ) for compact cars. Suzuki is also investing in next-generation technologies across EVs and HEVs, range extenders, ICE efficiency and light weighting, providing multiple pathways as future emission norms tighten further," Nomura said.
Nomura expects EV penetration in the PV segment to rise from an estimated 7.1 per cent in FY27 to 12.7 per cent in FY30, and in two-wheeler segment from 10.1 per cent in FY27 to 22 per cent by FY30. Within the 2W segment, it expects EV penetration in scooters to reach 45 per cent by FY30 from 21 per cent in August 2026.
Among its covered suppliers, Nomura expects Sona Comstar to be a key beneficiary given its exposure to electric powertrain components, while Uno Minda, Motherson Sumi and Samvardhana Motherson should benefit from higher content opportunities.
With the government notifying CAFE 2027 norms, with no material changes from the July 2026 draft, foreign brokerage Nomura believes most original equipment manufacturers (OEMs) can meet FY28 CAFE requirements with relatively moderate EV penetration. It estimated EV penetration of 1-3 per cent for Maruti Suzuki India Ltd (MSIL), 4-7 per cent for Hyundai Motor India Ltd, 4-7 per cent for Tata Motor Passenger Vehicle Ltd (TMPV), and 13-15 per cent for Mahindra & Mahindra (M&M).
As the targets tighten, the foreign brokerage expects the required EV mix will rise further by around 1-2 percentage points annually over the next five years.
Nomura said companies with a higher EV salience in their portfolios are likely to gain market share as rising EV penetration and tightening CAFE requirements should increasingly favour OEMs that have already established a faster electrification pathway.
"We expect TMPV, M&M to emerge as key beneficiaries in case EV penetration rises faster. Hyundai India also has the potential to gain share in the future, with its upcoming mass market EV (Jan-27) and considering its parent HMC’s competence in EVs," Nomura said.
For Maruti Suzuki India Ltd (MSIL), the final CAFE framework should be relatively easier to achieve, although removal of the small-car concession and lower strong-hybrid credit reduces the benefit, Nomura said.
"MSIL is also developing a range-extender hybrid (link ) for compact cars. Suzuki is also investing in next-generation technologies across EVs and HEVs, range extenders, ICE efficiency and light weighting, providing multiple pathways as future emission norms tighten further," Nomura said.
Nomura expects EV penetration in the PV segment to rise from an estimated 7.1 per cent in FY27 to 12.7 per cent in FY30, and in two-wheeler segment from 10.1 per cent in FY27 to 22 per cent by FY30. Within the 2W segment, it expects EV penetration in scooters to reach 45 per cent by FY30 from 21 per cent in August 2026.
Among its covered suppliers, Nomura expects Sona Comstar to be a key beneficiary given its exposure to electric powertrain components, while Uno Minda, Motherson Sumi and Samvardhana Motherson should benefit from higher content opportunities.