What is the New Vehicle Efficiency Standard (NVES) for Australia?

Australia sets first vehicle CO2 standard; aims for more EVs, efficient ICEs, needs strong policies, infrastructure.

Michael Higgins

Co-Founder, Managing Director
 @ Loopit.co

Published on 

June 5, 2024


Last updated on 

June 5, 2024

Key Takeaways

  • Australia's new vehicle emissions standards aim to reduce transport emissions by mandating automakers meet stricter CO2 limits.
  • This will drive greater electric vehicle affordability, model choice as carmakers sell more zero-emission models to comply.
  • Additional policies are needed for charging infrastructure, incentives to overcome upfront costs and accelerate widespread EV adoption.
  • While just a first step, the standards pave way for Australia's transition to an emissions-free transportation future.

For years, Australia has lagged behind other developed nations when it comes to regulating vehicle emissions and promoting fuel efficiency. While countries like the U.S., Canada, Japan, and those in the European Union have had vehicle emissions standards in place for decades, Australia remained one of the few developed nations without similar policies. This allowed less efficient, higher-polluting vehicles to comprise a larger portion of the national fleet.

However, with transport emissions being one of the largest contributors to Australia's greenhouse gas footprint, the need to take action became apparent. The newly introduced N (NVES) aims to reduce emissions from passenger and light commercial vehicles by setting increasingly stringent targets for automakers' fleets over time. The overarching goal is to slash emissions from new vehicles by promoting a transition to cleaner, more fuel-efficient models including hybrid and fully electric vehicles.

What is the New Vehicle Efficiency Standard (NVES)?

The New Vehicle Efficiency Standard (NVES) is Australia's first-ever national standard for vehicle emissions and fuel efficiency. Announced in 2023, the NVES aims to bring Australia in line with other major economies that have long had emissions regulations for new cars and trucks. It sets mandatory carbon dioxide (CO2) emissions targets that automakers must meet across their vehicle fleets sold in Australia.

The NVES will be phased in starting in 2025, with increasingly stricter fleet emissions targets phased in over subsequent years. From 2025-2028, the target is 145g CO2/km. This tightens to 108g CO2/km for 2029-2032, and then 81g CO2/km from 2033 onward. These targets represent the allowable average emissions across an automaker's fleet of vehicles sold in Australia.

How the NVES Will Impact Electric Vehicle Adoption

The NVES is expected to drive increased adoption of electric vehicles (EVs) in Australia by making them more affordable and widely available. As automakers work to meet the stricter fleet emissions targets, they will need to sell more zero and low-emission vehicles like EVs. The NVES could reduce the upfront cost of EVs by up to 24% by 2030 compared to business-as-usual projections. This equates to potential savings of $7,700 for an average EV.

Increased model availability is another benefit for Australian consumers. Currently, only around 30 EV models are offered locally compared to over 100 available in Europe. Government analysis indicates the NVES will incentivize automakers to import a wider range of EVs and efficient internal combustion engine (ICE) models to meet the emissions targets. More choice allows consumers to find an EV that suits their needs and budget.

Addressing Industry Concerns

The NVES faced significant pushback from the Australian automotive industry. Automakers argued that the proposed emissions reduction targets were too aggressive and failed to account for the unique demands of the Australian market, particularly the popularity of large diesel-powered SUVs and pickup trucks.

To address these concerns, the government made several concessions. Most notably, it granted temporary exemptions for certain vehicle categories like large SUVs and light commercial vehicles until 2030. It also adjusted the rate of emissions reductions required, allowing a more gradual decline than initially proposed. These changes aimed to give automakers more flexibility and time to adapt their lineups for Australian consumers.

Despite the concessions, the NVES remains a tough new standard that all carmakers must now prepare for. The government claims it "will deliver improved supply of fuel efficient models to Australians, saving motorists hundreds of dollars per year in fuel costs."

Promoting Fuel Efficiency Across the Fleet

While the NVES is expected to accelerate EV adoption, it will also incentivize automakers to bring more fuel-efficient internal combustion engine (ICE) vehicles to the Australian market. As the emissions targets become stricter over time, manufacturers will need to improve the efficiency of their conventional gasoline and diesel models to meet the fleet-wide standards.

Importantly, the NVES provides long-term regulatory certainty that allows automakers to plan their vehicle portfolios for Australia several years in advance. This clarity enables manufacturers to make investments in more efficient engine technologies, vehicle aerodynamics, and lighter materials to reduce emissions from ICE vehicles.

What It Means for Australian Consumers

The New Vehicle Efficiency Standard will bring significant benefits for Australian consumers. With automakers now incentivized to import more fuel-efficient models, buyers will have access to a wider range of electric vehicles (EVs) and cleaner internal combustion engine (ICE) vehicles.

For those looking to go fully electric, the increased supply of EVs hitting the market should help drive down purchase prices over time as per the government's projections. Mainstream affordable EVs could become commonplace, providing zero-emissions driving for the masses.

Even for consumers sticking with traditional engines, there will be many more fuel-efficient options from automakers working to comply with the stricter CO2 limits. The days of gas-guzzling models dominating sales may be numbered as industry analysts predict the NVES will reshape vehicle lineups.

Overall, the new standards should foster greater competition and expanded consumer choice. Australians will benefit from having access to cleaner, more economical vehicles suited to their driving needs and budgets.

Complementary Policies Needed

While the NVES is a crucial first step in paving the way for emissions-free driving in Australia, it alone is not enough to drive widespread EV adoption. A suite of complementary policies and initiatives will be needed to truly unlock the full potential of this transition.

One of the biggest hurdles to overcome is the lack of public charging infrastructure across Australia. Without a robust and accessible charging network, many consumers will remain hesitant to make the switch to EVs due to concerns over range anxiety. The government has acknowledged this need, outlining plans to work with states, territories, and the private sector to expand the nation's charging network.

Financial incentives and rebates could also play a key role in making EVs more affordable and attractive to buyers. While the NVES should help bring down EV prices over time, upfront costs remain a significant barrier for many Australians. Targeted incentives, similar to those offered in other countries, could help accelerate EV adoption, particularly in the crucial early years of the transition.

Ultimately, the road to emissions-free driving is a long one, and the NVES represents just the first few steps. Sustained policy efforts, investment in infrastructure, and continued collaboration between government, industry, and consumers will be essential to achieving this ambitious goal. But with the right approach, Australia can position itself as a leader in the global shift towards sustainable transportation.


The New Vehicle Efficiency Standard marks a pivotal step for Australia in tackling transport emissions and promoting the transition to cleaner vehicles. By setting mandatory emissions targets for automakers, the NVES will drive greater availability of electric vehicles and fuel-efficient models across the nation's roads. As EV prices become more affordable over time and consumer choice expands, Australians will have greater access to emissions-free driving.

However, the NVES alone is not a panacea. Complementary policies and investments are vital to build out charging infrastructure, provide purchase incentives, and accelerate the retirement of older, dirtier vehicles. Reducing emissions from transport requires a concerted, collaborative effort between government, industry, and consumers.

With Australia finally catching up to its global peers in vehicle emissions standards, the nation can unlock a future of cleaner mobility and more sustainable transport. By embracing this shift, we can curtail our environmental impact while realizing the economic advantages of cheaper operating costs and reduced fuel expenditures. The road to emissions-free driving starts now.

About the author
Michael is the co-founder and managing director at Loopit, a SaaS platform specialising in new mobility initiatives such as car subscription, rideshare and digital rental solutions. When he’s not launching new businesses, Michael enjoys motorsports, racing cars himself as well as boating.
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