Pollution caps set to force car manufacturers to supply low emission alternatives

New vehicle emissions caps, designed to force car makers to offer more low emissions models to Australia, could crimp the supply and affordability of utes and SUVs, the automotive industry has warned.

Families and tradies could soon face price hikes and fewer choices for popular SUVs and utes, the automotive industry has warned, after new vehicle pollution caps were unveiled.

On Sunday, the Albanese government released three potential options for a proposed fuel efficiency standard, slated to take effect next year, which would impose a fleet-wide cap on average emissions.

The change is designed to increase the uptake of low and zero emissions vehicles.

While the standards won’t ban any particular model, car brands will be penalised if the average emissions of all the vehicles they import is higher than a cap that will be slashed by more than 60 per cent from 2025 until the end of the decade, under the government’s preferred option for the standard.

As a result, car makers will be forced to sell more zero and low emissions models, or cut back on the sale of popular ute and SUV models, to avoid being hit with fines for breaching the mandatory pollution caps.

New fuel efficiency standards, unveiled on Sunday, are designed to drive the uptake of low and zero emissions vehicles. Picture: NCA NewsWire / Naomi Jellicoe

But many of Australia’s most popular vehicles already exceed the target before its 2025 starting point, stoking fears that certain models could be phased out or become more expensive before low-emissions alternatives are made available or become

Ford’s Everest and Ranger models, Nissan’s Patrol and Pathfinder and the Mitsubishi Triton are all in excess of the average CO2 standards, according to the government’s own Green Vehicle Guide.

Meanwhile, Toyota’s Land Cruiser and Prado models will be above the average standard, as will most makes of its Hilux model.

The Raptor and XL models of the Ford Ranger, the most popular vehicle sold in Australia in 2023, also sit above the average fuel standard.

Australian Automotive Dealers Association boss James Voortman said consumers ultimately risked facing higher prices, or restricted choice, for these popular models.

“Many utes and SUVs don’t meet the target for next year, let alone the requirements for 2029 – which is more than 60 per cent lower,” Mr Voortman said.

“To suggest that there will be as many options for consumers in the space of five years is overly optimistic. We don’t think this is achievable.”

Many iterations of the Ford Ranger, including the Raptor model, will be above the average emissions standard. Picture: Supplied.

While other countries have reduced new vehicle emissions over a much longer time frame, Mr Voortman said the government’s preferred option to reduce emissions was much more ambitious.

“(Other countries) have also offered generous incentives universally available for consumers to buy low emissions vehicles – the government’s preferred option could not be more different,” Mr Voortman added.

Tony Weber, chief executive of the Federal Chamber of Automotive Industries, shared concerns over the significant reduction in emissions, the government’s preferred option, and said affordability and choice must remain a priority.

“Most important is that Australian families and businesses can continue to access the style of vehicle that suits their needs for work and recreation,” Mr Weber said.

“On the surface, the targets seeking a 60 per cent improvement in emissions are very ambitious, and it will be a challenge to see if they are achievable taking into account the total cost of ownership.”

The start date for the policy is also a significant cause of anxiety amongst the car industry, which claims changing models set to be imported at such late notice will be challenging.

Energy Minister Chris Bowen was adamant that supply would not be reduced as a result of the reforms. Picture: NCA NewsWire / Gaye Gerard

But announcing the policy, Energy Minister Chris Bowen and Transport Minister Catherine King were adamant that affordability and supply of models would not be reduced.

“In countries with vehicle efficiency standards, utes and SUVs are often the top selling car,” Mr Bowen said.

“The international evidence is that it does not have an impact on price,” Ms King said.

Australia is the only country alongside Russia that does not have a fuel efficiency standard.

According to the government’s own analysis, the benefits of its preferred option in the form of savings on fuel, vehicle maintenance, and emission reductions, will outweigh the costs of technology, energy, and compliance by $96.5bn through to 2050.

Independent Kylea Tink, who has spearheaded a push in parliament for more fuel efficient, heralded the changes as a “ win for the family budget and a win for the climate”

“While it’s taken the government longer than initially promised to deliver these proposed standards, it’s pleasing to see the delayed timeline hasn’t resulted in weaker aspirations,” she said.

However, the Coalition warned Australians’ favourite vehicles could “soon be unaffordable” if Labor failed to strike the “correct balance” between minimising costs, reducing emissions and maximising choice for consumers.

In a joint statement Opposition transport spokeswoman Bridget McKenzie and climate change and energy spokesman Ted O’Brien raised concerns about industry representatives being fearful Labor’s “heavy handed approach” would “drive utes off Australian roads”.

“With the price of electric vehicles often tens of thousands of dollars more expensive than the ICE equivalents, it is critical that all costs across the lifespan of a vehicle are considered,” they said.

The government will continue to consult on the standard, and plans to introduce a regulator to oversee compliance before year’s end.