Posted in Operations and Supply Chain Terms, Total Reads: 2196
Definition: CAFE (Corporate Average Fuel Economy)
CAFE refers to the corporate average fuel economy which is a set of regulations in the United States for automobile manufacturers. It sets up minimum standard on the fuel economy of vehicles produced by the manufacturer in terms of Miles per Gallon (mpg).
A heavy penalty is levied on the manufacturer in case the manufacturer is unable to meet these standards. These laws apply to small cars and light trucks with a gross vehicle weight rating (GVWR) of less than 8500 pounds.
These standards are regulated by the National Highway Traffic Safety Administration (NHTSA) while the fuel efficiency is measured by the US Environmental protection agency (EPA). These standards are set keeping in mind the need for energy conservation, technological feasibility and economic practicality. It should be noted that as per the current standards the vehicles with a larger footprint (which is defined as the product of wheelbase and track width) have lower fuel economy standards and vice versa.