We’re now two weeks into 2025 and that means the first two weeks of the New Vehicle Efficiency Standards (NVES) have gone by without the automotive world collapsing on itself like some doomdayers predicted.
Well, maybe that’s a slight exaggeration, but the truth is despite the industry’s complaints about NVES and the way it fractured the car makers behind-the-scenes, the introduction of these new standards are long overdue.
NVES is the government’s plan to cut emissions and usher in a new era of more fuel-efficient vehicles, which should both help the environment and save motorsists money at the bowser. The important thing to remember about NVES is it does not mandate any particular technology – it is not a ban on petrol-powered cars nor does it mandate electric vehicles (EVs) – instead it has given the industry a figure on how many emissions it can average across its fleet of showroom models.
The cold, hard truth is Australia has lagged behind the rest of the developed world in regards to vehicle emissions for nearly a decade as the Federal Government simply didn’t prioritise it and the industry happily sat back and enjoyed having a free ride (even if they would publicly deny such a thing).
For a practical demonstration of just how slow Australia is to adopt emissions regulations, what’s known as ‘Euro 6d’ standards only became law locally on December 1, 2024, which was three years behind Europe.
There was no practical reason for this, given the local car manufacturing industry was gone by this point and therefore no longer needed the protection. Instead, Australian customers were either missing out on the latest models or being sold the older technology, depending on the circumstances. So by introducing NVES, the government hopes to accelerate the cleaning up of Australia’s new vehicle fleet.
Whatever your political beliefs, NVES is better for the air we and our loved ones breathe because it is focused on reducing the amount of carbon dioxide (CO2), carbon monoxide (CO), nitrogen oxides (NOx) and particulate matter (PM) that is pushed into the atmosphere everyday from the exhaust pipes of our cars.
So how will it work? In simple terms each vehicle manufacturer will have a set average CO2 target for the vehicles it produces, which they must meet or beat in any given year. While the target has been set at an achievable level for 2025, in the coming years the CO2 target will be lowered and in order to continue to hit the target, car makers will almost certainly have to introduce more fuel-efficient, low or zero emissions vehicles.
This is why you’ve seen the sudden resurgence of the plug-in hybrid (PHEV) in 2024 and moving into 2025, it is a tried and tested technology that is an easier sell to customers than a switch to all-electric. It’s why Ford is investing so much into its new Ranger PHEV and why there is so much hype around the BYD Shark 6, if plug-in hybrids can perform like a petrol but produce less emissions it becomes a win-win.
But PHEVs or EVs won’t be the only solution, expect to see a broad array of technologies on offer in the coming years to suit the different demands across the market. Toyota Australia is one brand all set for NVES, with its so-called ‘multi-pathway solution’ of hybrids, PHEVs, EVs and eventually hydrogen-powered vehicles set to enter showrooms in the near-future.
“Well, we’ve always said multi pathway solutions, Steve,” explained Toyota Australia chief, Sean Hanley. “There’s no doubt plug-in hybrids will play a role in Toyota’s portfolio in the next few years – has to. Hybrid electric vehicles will play a role in Toyota’s portfolio. Battery electric vehicles will play a role in Toyota’s portfolio.
“And I think in a further five to 10 years, ‘30 to ‘35, hydrogen fuel cell electric vehicles, I think will play a significant role. But infrastructure there is at least a decade away. I think it will be 2035.”
Introducing PHEVs, EVs and hydrogen vehicles will be a massive change on the surface, but given the staggered introduction of the NVES targets, it’s likely to be a gradual transition.
Car makers have until 2027 to really knuckle down and get serious, with the current targets manageable before then but tougher in the latter stages of the decade. If a car brand can’t hit the NVES CO2 average it will be hit with a fine of $100 per gram over that target per vehicle, but on the flip side, brands that are underneath the CO2 target will get credits to the equivalent value. Which means all-electric brands like Tesla and Polestar, or brands will a heavy mix of EVs, will be able to sell their ‘credits’ to brands in need – which opens up a profit centre for them, which could potentially bring down the price of EVs.
Despite some panic merchants declaring the introduction of NVES draconian or the ‘end of utes’ in reality the government has made several key concessions to the car industry that should make the car-buying public happy. Namely, there are separate targets for ‘passenger vehicles’ and ‘commercial vehicles’ so the bar isn’t set as high for utes, plus they allowed SUVs like the Toyota LandCruiser, Ford Everest and Isuzu MU-X to be considered ‘light commercial vehicles’ and therefore have more leeway.
So don’t expect much to change in the short-term but be prepared for a transition towards more hybrids and PHEVs from the mainstream brands like Toyota, Mazda, Ford and co. in the coming years.
Or not, there’s also a federal election due sometime in 2025 so it could all get turned on its head with a new government… (but, crucially, the industry has accepted that more efficient vehicles is a good idea and begun planning for that, so the idea of changing with every new government is probably not a great way to plan a multi-national business, so expect NVES to stay).
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