Car makers may soon withdraw Aussie models, increase prices ahead of major rule change
Australia's automotive market is facing serious uncertainty in the coming months, ahead of the federal government's New Vehicle Efficiency Standard (NVES) that comes into effect in July, requiring manufacturers to meet stricter emissions targets or face heavy fines.
Announced last year, the NVES sets carbon emissions limits for new cars sold in the country, mandating that manufacturers meet fleet-wide targets or face harsh financial penalties. The NVES — introduced in January, 2025 but enforced from July — aims to encourage the sale of more fuel-efficient and electric vehicles.
Along with Russia, Australia was one of the last major countries without vehicle efficiency laws, which resulted in us becoming a "dumping ground" for the least efficient and most polluting cars.
Professor of Future Urban Mobility, Hussein Dia, told Yahoo the changes will eventually be positive, even if not immediately apparent. "[It's] going to entice even European manufacturers," Dia said earlier. "We're not going to be a dumping ground for polluting vehicles anymore, which is a good thing", he added.
From July, popular and well-known models, such as the Ford Everest 4x2 and Isuzu M-UX 4x2, may be pulled from sale due to classification as passenger vehicles, which have tighter restrictions, compared to their "commercial" 4x4 variants.
Isuzu, Mazda, and Great Wall Motors have informed dealerships they anticipate incurring fines from NVES and may increase prices as a result. Toyota and Mitsubishi, while supportive of the policy, acknowledged the upcoming challenges.
The changes may also mean availability of the wildly popular Toyota LandCruiser may soon become more limited, though Toyota assured the ABC it will maintain the supply of the "tool of trade" vehicle. It acknowledged the new targets are "very challenging" and said the company was still working through how to manage them.
At the same time, electric vehicle (EV) uptake remains slower than the government's targets, raising questions about whether the market is ready to adapt to the NVES shift. While the year started with sluggish EV sales, recent figures suggest a modest rebound.
The latest data from the Federal Chamber of Automotive Industries (FCAI) and Electric Vehicle Council (EVC) showed that 8,385 battery electric vehicles were sold in Australia in March, making up 7.5 per cent of total new car sales for the month.
However, this is still lower than March, 2024 when 10,464 EVs were sold, accounting for 9.5 per cent of the market. The decline has been attributed to weaker sales of Tesla's Model Y and Model 3, impacted by consumer sentiment surrounding Elon Musk's involvement in US politics and anticipation of a new Model Y release. Adding to the turmoil, Donald Trump's new tariffs on foreign automobiles and potential scrapping of EV subsidies in the US have created global market instability, leading some brands to reconsider their EV commitments.
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The Coalition has proposed removing NVES penalties if elected, arguing it would ease cost-of-living pressures. However, industry experts warn that without fines, Australia could once again become a dumping ground for high-emission vehicles, and brands might limit EV supply.
Limiting the supply of electric vehicles (EVs) could have significant negative consequences. It would slow down Australia's transition to cleaner, more sustainable transportation, hindering efforts to reduce greenhouse gas emissions. As global demand for EVs increases, restricting supply could also prevent manufacturers from capitalising on a growing market, which may hurt the local automotive industry's potential for growth and innovation.
Forecasts suggest manufacturers could rack up $2.8 billion in NVES fines by 2029, and over 60 new EV models are soon expected to enter the Australian market, with sub-$60,000 options increasing significantly. Some stakeholders within the automotive industry are advocating for a 24-month grace period before the enforcement of fines.
This proposed delay would allow manufacturers more time to adjust to the stricter emissions targets and prepare their fleets for compliance, but on the other hand, it may also prolong the reliance on high-emission vehicles in the market, delaying the overall shift toward greener alternatives.
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