Why Australia’s new-car emission penalty results are ‘a major concern’

The first year of the New Vehicle Efficiency Standard (NVES) is in the rear-view mirror, and government data shows that two-thirds of carmakers in Australia were able to meet the debut emissions limits.

Introduced in 2025, under the NVES carmakers are fined $100 per gram of CO2 per kilometre their vehicles emit above a certain threshold. In its first year, Type 1 vehicles (the majority of passenger cars and SUVs) had an average emissions limit of 141g/km, while for Type 2 vehicles (heavier duty models such as 4x4s and utes) this was 210g/km.

These limits will get stricter and stricter each year until 2029, when Type 1 vehicles will need to emit 58g/km or less, while Type 2 vehicles will have a 110g/km cap.

According to data published by the Australian Government via the NVES Regulator, there were a total of 59 regulated entities (carmakers and importers) who “entered a total of 620,947 NVES covered vehicles” throughout 2025.

Of these 59 regulated entities, 68 per cent – or 40 companies – beat their targets, while 12 per cent of all covered vehicles were zero-emissions. Of the NVES fleet, 71 per cent of vehicles were classified as Type 1 with an average CO2 output of 114g/km, while the remaining 29 per cent of Type 2 vehicles had an average output of 199g/km.

Below is the full table of the regulated entities, their number of covered vehicles and interim emissions values (IEVs), the latter of which shows whether they beat (negative values) or exceeded (positive values) their NVES targets.

The total liabilities accrued not only for certain regulated entities but for the industry as a whole is expected to increase in 2026, given the limits have been reduced to 117g/km for Type 1 vehicles and 180g/km for Type 2 vehicles.

“These first NVES results show that cleaner vehicles and a competitive market can go hand in hand,” Federal Infrastructure, Transport, Regional Development and Local Government Minister Catherine King, said in a media release.

“Australians continue to have a choice across a wide variety of vehicles. These results make it clear the NVES supports both lower emissions and consumer affordability.”

However, Minister King’s long-term enthusiasm has been met with a warning from the Federal Chamber of Automotive Industries, the peak body for Australia’s carmakers.

“An increase in the range of zero and low emission vehicles available in the Australian market have supported the achievement of the first-year targets,” FCAI chief executive Tony Weber said.

“To support the emissions reduction objectives, car makers have increased the range of EVs with more than 100 EV models available to consumers.

“However, despite this increase in supply, EVs represented just 8.3 per cent of new vehicle sales in 2025, which was only a 1.1 percentage point increase on 2023.

“This is a major concern because an increase in EVs on Australian roads is critical to the achievement of the stringent Government targets which reduce each year to 2029.

“The increase in the supply of zero and low emissions vehicles currently being undertaken by car makers is the best action they can take to meet the NVES targets. However, the key to long-term success of the NVES relies on increased demand for EVs.

“At the moment, demand for EVs remains subdued and this is a major concern and disappointment for carmakers.

“FCAI is keen to see the Government consider policy settings that support consumer demand for EVs and low-emission vehicles which will assist the achievement of the NVES.”