The Australian Federal Government has announced a key change to its New Vehicle Efficiency Standard (NVES), preventing car manufacturers from flooding dealerships with low-emission vehicles that may sell due to lower consumer demand. The revised rule will now count emissions at the point of sale rather than when a vehicle arrives in the country, closing a loophole that could have allowed brands to adhere to CO2 targets by putting the dealers at risk of losses.
Read more: How the New Vehicle Emission Standard came into effect.
How did the loophole work?
The NVES, which sets annual CO2 emission targets for car manufacturers, was originally planned to track vehicles based on their registration in the Register of Approved Vehicles (RAV) upon arrival in Australia. These standards were introduced at the start of 2025 but penalties will be applied from July 1 only, set at $100 per g/km of CO2 for each vehicle beyond the emissions target. So, there are harsh financial consequences for companies that breach the NVES, irrespective of the realities of the market demand especially at a time when EV sales are in a steady decline.
This system would have enabled carmakers to import and stockpile low-emission vehicles, putting strain on dealers who will be stuck with low-volume models..
By shifting the tracking point to when the vehicle is sold, the government has extended some protection to Australian dealers, while also pushing for fair adherence to the NVES.
Read More: Light vehicle emissions intensity in Australia; Trends over time.
Industry response and implications for dealers
The decision has been welcomed by industry stakeholders, including the Motor Trades Association of Australia (MTAA). CEO Matt Hobbs stated, “Emissions should be counted when the vehicle is sold. This ensures that manufacturers do not pressure dealers into taking on stock they cannot immediately sell just to meet compliance targets.”
Read More: The original NVES Act.
Balancing high and low-emission vehicle sales
It’s important to remember that NVES does not seek to outright ban the sales of high-emission vehicles in the country, particularly diesel-powered models. Car manufacturers will still be permitted to sell high-emission vehicles, provided they offset them by selling enough low-emission models to remain within their CO2 limits. The NVES allows car brands to:
- Offset emissions over a two-year period.
- Purchase compliance credits from manufacturers that outperform their targets, and
- Use low-emission vehicle sales from future years to balance prior excess emissions.
The rule change in the NVES prevents carmakers from flooding dealerships with low-emission vehicles at the end of the year to artificially meet targets, ensuring a more accurate reflection of market sales. Furthermore, these targets will keep getting harder for brands that lack electrified models as the CO2 caps will reduce every year till 2029.
If you’re looking to upgrade to a greener car, make sure you have all the documents you need to sell your car, including a Roadworthy Certificate.
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