Federal Parliament Passes New Vehicle Efficiency Standard Legislation

Parliament has passed Australia’s New Vehicle Efficiency Standard (NVES) legislation, with the scheme to become effective on 1 January 2025. Opposed by the Liberal-Nationals coalition, the bill passed after Labor secured a deal with the Greens for the government to scrap legislation for fast-tracking offshore gas project approvals.

According to the government, the NVES, which will apply to new cars, will reduce emissions from new passenger vehicles by more than 60 per cent by 2030 and roughly halve the emissions of new light commercial vehicles over the same period. It also predicts that by 2050, motorists will save around $95 billion in fuel and that transport sector CO2 emissions will reduce by around 321 million tonnes.

Additionally, motorists can expect a better range of diesel, petrol, hybrid and electric vehicles to enter the Australian market as a result of the NVES, the government claimed.

“This is a monumental milestone for Australians, with this standard to pave the way for Australians to access and benefit from the most advanced car, SUV and ute technology offered in other countries, which are cheaper to run and better for the environment,” said Catherine King, Minister for Infrastructure, Transport, Regional Development and Local Government.

The 2024-25 budget includes a provision of $84.5 million over five years to help establish the scheme and a regulator, as well as facilitate credit trading between manufacturers.

The MTAA welcomed the passing of the bill, saying it signifies an important moment for the Australian automotive industry.

“It’s undeniable that the targets outlined in the bill will present substantial challenges for certain car companies, emphasising the importance of ongoing monitoring and review,” said Matt Hobbs, CEO of the MTAA. “It’s also particularly crucial to consider the evolving landscape in the United States and Europe.”

“In parallel, while we appreciate the transition support already provided to our sector in the most recent federal budget, we recognise that there is still more work to be done. We remain committed to working alongside the government to secure the necessary support automotive retailers need to adapt in a rapidly changing environment sparked by the advent of electric vehicles.”

James Voortman, CEO of the Australian Automotive Dealer Association, said the organisation had long supported the introduction of the NVES. “Make no mistake – this is an ambitious standard which will be very challenging to achieve, but dealers are ready to play their part in significantly lowering vehicle emissions,” he said.

Tony Weber, Chief Executive of the Federal Chamber of Automotive Industries, said the organisation welcomed “the certainty” that the NVES provides for Australia’s automotive industry. “This will be challenging, but we’ve always recognised the importance of a government-mandated CO2 standard for Australia,” he added.