A NVES is a regulatory obligation on car makers to supply vehicles that on average meet a certain CO2 g/km emissions target.

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Australia is currently one of the only advanced economies globally without a NVES.

The Standard only applies to new, light vehicles (i.e. cars, SUVs, four-wheel drives and utes).

Two targets are set, one for passenger vehicles and SUVs, and a higher target for most utes and vans.

The Government has been consulting on what standard to put in place, releasing a consultation paper in April 2023 setting out the different factors to be considered.

An Impact Analysis has since been released which lays out three options forward, which is currently open for feedback.

The Federal Government says the NVES will push car makers to give Australian motorists more choices of new cars, utes and vans that use less fuel and that have until now only been available to buyers in overseas markets.

As new vehicles use less fuel per kilometre, the Government argues an average new vehicle purchaser in 2028 would save $5,710 over five years under the NVES.

Over the life of a vehicle, the Government says its policy will provide around $17,000 in savings per new
vehicle.

“Because of a lack of action on an Efficiency Standard, Australian families are paying around $1000 a year more than they need to be for their annual fuel bill – the Albanese Government is delivering long-term cost-of-living relief to fix that for new vehicles and put money back in people’s pockets,” said Minister for Climate Change and Energy Chris Bowen.

“We’re giving Australians more choice to spend less on petrol, by catching up with the US – this will save Australian motorists $100 billion in fuel costs by 2050.

“This is about ensuring Australian families and businesses can choose the latest and most efficient cars and utes, whether they’re petrol and diesel engines, or hybrid, or electric.”

National Party MPs have raised concerns about the impact of the NVES, particularly in regional and rural communities, with Senator Bridget McKenzie claiming Labor’s proposed policy will put many cars currently favoured by Australian families out of reach.

“During a cost-of-living crisis, the last thing people want to hear is that the price of a new family car or a new ute for a tradie is going to be forced up to make EVs cheaper,” Senator McKenzie said.

“If you’re a tradie and you’re buying vehicles such as a BT-50 or a D-Max or a HiLux or a Ranger, the Albanese Government’s family car tax is going to drive up the cost of purchasing that vehicle.”

Member for Cowper, Pat Conaghan said increasing the purchase price of popular family vehicles only makes life harder for people in the regions, particularly the more rural settings in his electorate.

“In New Zealand, we saw a similar tax drive up the cost of a car by about NZ $7,000.

“A punitive tax is not an appropriate way to push people towards EVs that are still not affordable or practical for many rural and remote settings,” Mr Conaghan said.

The Federal Government says there is no evidence to suggest that a NVES will increase vehicle prices.

Motor Trades Association of Australia (MTAA) CEO Matt Hobbs said the automotive industry was in agreement that a NVES was necessary.

“Nobody disagrees Australia needs to join the rest of the developed world with a standard to ensure we get our fair share of new technology and choice of electric vehicles,” said Mr Hobbs.

“The whole industry knows putting in place a fuel efficiency standard is the right way to go.

“The argument is just about the fine details.”

The new car market has continued its strong performance into 2024 with record January sales of 89,782 new vehicles, 5.8 percent more than January 2023 and breaking the previous January record of 88,551 set in 2018.

The record January result was underpinned by continued customer preference for SUVs and light commercial vehicles.

SUVs accounted for 55.5 percent of sales while light commercials were 22.9 percent.

Passenger vehicles made up 18.3 percent of sales.

Low emission vehicles remained popular, with hybrids, plug-in hybrid and battery electric vehicles making up 17.4 percent of sales, while battery electric vehicles represented 5.4 percent.

“The continuing preference for SUVs and utes demonstrates the challenges the Commonwealth Government is facing as it works to introduce a New Vehicle Emissions Standard (NVES),” Federal Chamber of Automotive Industries Chief Executive Tony Weber said.

“Industry wants an emissions standard that is ambitious without limiting the choice and increasing the cost of the vehicles Australians need and want.

“Even with the current incentives offered by the Commonwealth and State and Territory Governments, sales of battery electric vehicles appear to have plateaued during recent months.”