Information for Industry

Australia’s New Vehicle Efficiency Standard will incentivise the development and supply of more efficient cars.

What is the New Vehicle Efficiency Standard?

Under the New Vehicle Efficiency Standard (the Standard), each car supplier has a set average CO2 target for all new cars they produce, which they must meet or beat. Over time, the CO2 target is lowered and in order to continue to meet or beat the target, suppliers must supply more fuel-efficient, low or zero emissions vehicles into the Australian market. 

The target is applied nationally on average. Suppliers can still sell any vehicle type they choose but they’ll need to sell more fuel-efficient models to offset any less efficient models they sell. 

How will the Standard be regulated?

The Standard will commence from 1 January 2025. A new government regulator will be established to oversee its operation. We will work closely with industry to ensure implementation is effective and efficient.

The targets for car manufacturers to meet or beat under the Standard will be reviewed on a 5-yearly basis. 

Our key functions as a regulator will be to assess car manufacturer performance against the targets, and ensure compliance by: 

  • Calculating the sales weighted average mass of all vehicles sold be each car manufacturer
  • Calculating the sales weighted average CO2 emissions of all vehicles sold be each car manufacturer
  • Comparing the mass and CO2 level to the limit curve.

If the results are below the curve, the car manufacturer has met the target for that year and will accrue tradeable credits. If the results are above the limit curve, the car manufacturer has not met the target for that year and they will have two years to bring their result back to zero, for example, by offsetting with traded credits, before a financial penalty becomes payable. 

Contact

For more information, please contact the Cleaner Cars team