Say hello to cleaner cars
Australia’s New Vehicle Efficiency Standard (NVES), implemented at the start of 2025, might help motorists save money at the bowser. How? Read on to find out.
The NVES aims to reduce transport emissions by increasing local sales of cleaner, more fuel-efficient vehicles. More efficient vehicles should mean less money spent at the bowser.
What is the NVES?
Under the NVES, car manufacturers must meet strict annual limits on carbon dioxide (CO2) average emissions across their new vehicle sales in Australia. If car makers don’t comply they can be fined. This is to encourage car manufacturers to sell their most fuel-efficient and low-emission vehicles in Australia – not just overseas. This includes internal combustion engine, battery electric, plug-in hybrid and hybrid vehicles.
Manufacturers may still offer cars that produce relatively high emissions, but they’ll need to offset those with lower-emission vehicles to meet the average limit. Emission limits will gradually reduce over time, further incentivising manufacturers to keep producing and selling cleaner cars.
The NVES brings Australia into line with major global car markets such as Europe and the United States. Authorities will begin calculating manufacturers’ emissions from 1 July 2025.
What vehicles are covered by the NVES?
The NVES covers all types of passenger and light commercial vehicles, including SUVs, vans and utes with a gross vehicle mass of 4500kg or less. The NVES splits vehicles into two categories – Type 1 and Type 2.
Type 1 includes passenger cars such as hatchbacks, sedans, and people movers and includes models such as the Toyota Corolla and Hyundai Palisade. Type 2 vehicles have less strict emissions targets and include utes, vans and certain four-wheel-drive SUVs. For example, the Toyota LandCruiser and Nissan Patrol.
The NVES doesn’t ban the sale or fine a car manufacturer for any particular class or type of vehicle. However, manufacturers who can’t offset higher-emission vehicles with more efficient ones may withdraw certain models to avoid fines. It’s worth noting that high-selling models in Australia, such as the Toyota Hilux and Ford Ranger, are sold in markets that already have stricter emission standards.
Will the NVES increase car prices?
Manufacturers want to avoid fines while maintaining market share and profitability and some car makers have expressed an intention to pass on any fines they receive to customers, through higher prices. Others have suggested they may axe some of their less efficient models to meet the targets. Increased prices may have the effect of reducing sales, lowering the fines paid by the manufacturers on those vehicles and helping them achieve the NVES targets.
The NVES doesn’t apply to used vehicles. However, if prices increase on certain new models, it could have a flow-on effect in the used car market.
What does RAA think?
RAA supports reducing transport emissions and saving motorists money at the bowser. RAA’s Mobility Technology Specialist Mark Borlace says it’ll help Australia catch up to the US and Europe.
“The reforms will reduce emissions and provide greater fuel savings to motorists,” Mark says.
“RAA will continue to advocate for members and monitor developments in the new and used car markets.”