CAFE standard: the regulation that is redesigning the car fleet

The CAFE standard (Corporate Average Fuel Economy/Corporate Average Fuel Emissions) is now one of the main drivers of transformation in the European automotive market. It is aimed directly at car manufacturers but its effects have a concrete impact on businesses and fleet managers by influencing vehicle supply, costs and renewal strategies.

In 2026, the CAFE standard is part of a gradual tightening trajectory that requires companies to anticipate their mobility choices now so as not to be subject to them tomorrow. This trajectory is now part of a European context in full recomposition, marked by the European Commission's announcements in December 2025 on the greening of fleets and the evolution of the framework after 2035.

1- Understanding the CAFE standard: what is it?

The CAFE standard is a European standard dating from January 2021 for car manufacturers in Europe. It aims to reduce greenhouse gas emissions by imposing CO² emission quotas on manufacturers.

For manufacturers, it is calculated on all new vehicles registered in a given year, it is based on an overall average integrating all engines: electric vehicles, plug-in hybrids, hybrids, thermal vehicles.

CAFE standard: its objectives and its trajectory

The CAFE standard is part of a long-term trajectory defined by Europe. Here are its main objectives:

- 2025: an objective to reduce average emissions to 81 g of CO²/km per new vehicle (reduction of around 15% compared to the reference level).

- 2030: a desired average of around 50 g/km

- 2035: an initially “planned” end to the marketing of new thermal vehicles in the European Union but relaxed by the European Commission on Tuesday, December 16, 2025.

After 2035, manufacturers will certainly be able to market gasoline, diesel, hybrid and plug-in hybrid models in the EU provided they offset the CO2 emissions generated by these vehicles.

In 2026, the CAFE standard continued to constrain car manufacturers by requiring a gradual reduction in CO² emissions from new vehicles.

Year after year, the European car fleet is becoming less emitting, which makes it possible to reduce the impact of road transport on the climate and to respect European environmental commitments.

According to L'Argus, between 2021 and 2024, there was a decrease of around 9 to 10g/km in CO₂ emissions from new cars in Europe, which represents a decrease of around 8—9% over this period, despite fluctuations linked to changes in the energy mix and the market. This dynamic will surely slow down given the more moderate sales of electric vehicles.

2 - An impact on the automotive supply and businesses

In order to meet the objectives of average CO₂ emissions, manufacturers are forced to offer an adapted automotive offer. The electrification of their ranges is accelerated, there are fewer internal combustion engines and especially fewer large engines that emit more emissions. Some models have come up in range and prices have been revised up.

Concretely, on the market, there are fewer choices in thermal vehicles, fewer fantasies possible.

For companies and fleet managers, these developments require a strategic adaptation of the fleet. The choice of vehicles is more restricted and is subject to a trade-off between uses, costs and regulatory compliance. Indirectly, the CAFE standard results in indirect financial impacts, a need to control TCO and the gradual integration of electric vehicles into fleets.

The cumulative effect of the CAFE standard and taxation

In France, the CAFE standard does not apply in isolation. It acts as a direct complement to car taxation, the objective of which is also to guide choices towards vehicles with fewer emissions.

Combustion vehicles remain authorized for sale and use, but their total cost of ownership (TCO) is increasing significantly. When buying or leasing, taxes and penalties weigh more, while in use, recurring taxation and operating costs reduce their economic competitiveness compared to electrified vehicles.

On the one hand, the CAFE standard pushes manufacturers to reduce the average emissions of their new vehicles, thus transforming the offer available on the market. On the other hand, French taxation reinforces this dynamic by financially penalizing the most polluting vehicles through several levers:

• a progressively hardened CO₂ penalty
• annual taxes calculated based on emissions
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• less favourable depreciation ceilings for highly emitting vehicles.

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A major innovation has now been added to this framework: for the first time, the European Commission is setting numerical objectives for greening the fleets of large companies.

From 2030, Member States will have to ensure that a significant proportion of new fleet registrations are composed of zero- or low-emission vehicles.

For France, the thresholds communicated are as follows:

- 2030:69% of vehicles with zero and low emissions, including 45% 100% electric

- 2035:95% of vehicles with zero and low emissions, including 80% zero emissions

These objectives concern large companies (+250 employees or +50M in turnover) and reinforce the economic pressure on thermal fleets, already impacted by the LOM law, the annual incentive tax (TAI) as early as 2026 and the reform of benefits in kind.

3- Anticipate to better manage your car fleet

The CAFE standard is now a regulatory framework that is redesigning the automotive market and corporate fleet management. Although it is not aimed directly at businesses, it is profoundly changing the supply of vehicles and, combined with French taxation and the new European guidelines on the greening of fleets, reinforces the economic constraints weighing on car fleets.

The measure to relax the post-2035 framework by the EU does not change the climate objectives. In 2030, business fleets remain at the heart of the strategy! In 2026, the gradual acceleration continues and requires companies to anticipate their mobility choices intelligently in order to manage the fleet and avoid additional costs in the long term.

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