CAFE

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Definition

The Corporate Average Fuel Economy (CAFE) standards are regulations in the United States, first enacted by the United States Congress in 1975, after the 1973–74 Arab Oil Embargo, to improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) produced for sale in the United States.

CAFE neither directly offers incentives for customers to choose fuel efficient vehicles nor directly affects fuel prices. Rather, it attempts to accomplish the goals indirectly, by making it more expensive for automakers to build inefficient vehicles by introducing penalties.

The original CAFE standards sought to drive automotive innovation to curtail fuel consumption, and now the aim is to create domestic jobs and cut global warming. Stringent CAFE standards together with Government incentives for fuel efficient vehicles in the United States should accelerate the demand for Electric Vehicles.

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