Australia’s automotive industry has met the Federal Government’s first New Vehicle Efficiency Standard (NVES) targets, according to results released on Tuesday, though significantly tighter emissions limits in the coming years are expected to make ongoing compliance more challenging.
NVES report outlines first-year results
The inaugural NVES report, released by the scheme’s regulator, details interim emissions values for individual carmakers and the number of credits issued for vehicles supplied during 2025. Taken together, the results show the industry met its combined emissions obligations in the first year of the scheme.
Future targets become progressively tougher
While the 2025 targets were achieved, emissions limits are set to tighten sharply over the remainder of the decade. From 2026, NVES targets for passenger vehicles are 17 per cent lower than 2025 levels, while targets for light commercial vehicles fall by 14 per cent.
By 2029, passenger vehicle targets are scheduled to be 59 per cent lower, with light commercial vehicle targets 48 per cent lower than 2025 benchmarks.
EV supply grows, demand remains subdued
The Federal Chamber of Automotive Industries (FCAI) said carmakers had expanded the availability of zero- and low-emission vehicles to support early compliance, with more than 100 electric vehicle models now on sale in Australia.
However, EV uptake remains limited. Electric vehicles accounted for 8.3 per cent of new vehicle sales in 2025, representing a 1.1 percentage point increase compared with 2023.
FCAI chief executive Tony Weber said stronger growth in EV demand would be required to sustain compliance as targets tighten.
Cost pressures flagged as compliance challenge
Industry representatives have warned that the pace of emissions reductions required under the NVES may place pressure on manufacturers, particularly if demand for EVs does not accelerate. Any additional compliance costs generated under the scheme could ultimately flow through to new vehicle prices.
Policy settings under scrutiny
The FCAI has called for policy measures that encourage consumer demand for electric and low-emission vehicles, arguing that supply alone will not be sufficient to meet the NVES targets through to 2029.
The NVES is a central part of the Federal Government’s transport emissions strategy, with annual targets designed to progressively reduce the average emissions of new vehicles sold in Australia.
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