New emissions regulations to affect car, ute and SUV customers from July 1
Emissions regulations for all new vehicles come into play soon, and could push prices up.
A new set of laws for vehicle emissions is set to push the prices of new cars, SUVs and utes skyward – and some Aussie favourites are already facing the axe.
The federal government’s New Vehicle Efficiency Standard (NVES) enforcement kicks in from July 1 2025, with car brands being forced to adapt or die under the new rules which are designed to bring in “cleaner cars” and give buyers “more choice of new, efficient vehicles”.
The new law puts the onus on car brands to bring vehicles to market that meet a target for CO2 emissions, measured in grams emitted per kilometre driven (g/km).
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In 2025, so-called MA-class vehicles that fall under the Type 1 passenger vehicle rules have a target of 141g/km of CO2. The Type 2 vehicles – light commercials like vans, utes and small trucks, as well as heavy-duty 4x4 SUVs, have targets set at 210g/km or less. Thosetargets are higher because that sort of vehicle typically uses diesel power, which tends to emit more CO2.
The target numbers will get tougher and tougher. Type 1 vehicles will need to be 58g/km CO2 by 2029, while Type 2 commercial vehicles will need to hit 110g/km CO2.As the CO2 targets become harder to achieve, newer vehicles will have to be more eco-conscious, with electrification, hybrids and full EV / BEV models expected to be key inclusions across the board, including in big SUVs and utes.
If a car brand offers vehicles that beat the emissions targets, they can earn credits.
If the vehicles miss the target, they will have to either buy credits – a cost that may be passed on to the consumer – or offset it over two years by adding more fuel-efficient models.
We’re talking significant fines, too; exceed the CO2 emissions target, and brands will be penalised $100 per g/km of CO2 for every vehicle over the target.
Here’s a different way of thinking about it.
Say you’re at the butcher shop, and they have a great mix of meats. Imagine there are new rules to say that butchers have to sell a higher proportion of fake meat to help the environment.
And then imagine that the proportion of fake meat at the butcher shop has to increase significantly over time, so that there can still be real meat on offer for you to buy … you might have to pay a lot more for the real meat, because it’ll become scarcer and harder to access.
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That’s kind of what this equates to.
You’ll have a choice of lots of veggie burgers (EVs and hybrids), but it’ll get harder to buy the wagyu (diesels and petrols) you’ve been used to.
A number of car brands have signalled their intentions to pass on those fines to customers as a way of staying afloat. Others with a richer mix of models in their line-up could offset their emissions levels across different product lines to help balance the books.
It gets more confusing, with some vehicles with four-wheel-drive to be considered ‘light commercial’ models, with less stringent requirements.
That includes utes and some of the associated large SUVs with three rows of seats.
Because of this, some rear-wheel-drive, ute-based large SUVs will be considered passenger vehicles with higher penalties, while the 4x4 versions won’t.
Already, Ford has confirmed it will kill off the rear-wheel-drive versions of its Everest SUV as a direct result of the looming NVES legislation, and likewise Isuzu has reportedly decided to axe rear-wheel-drive MU-X variants in the near future, too.
The irony here is that these models are the lowest-emitting versions of their respective model ranges – not to mention the most affordable, too.
It is clear that the dual-cab diesel utes and V8-powered four-wheel drives you see today mightn’t last beyond the end of the decade, with the ever-tightening laws set to significantly cut the number of these vehicles on offer to the public.
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Toyota has been Australia’s number-one best-selling car brand for the past 22 years, and the company’s vice-president of sales, marketing and franchise relations, Sean Hanley, admits that NVES is going to throw up some challenges.
“First of all, we accept the notion of a new vehicle efficiency standard,” said Mr Hanley.
“We supported it. Nothing has changed.
“What we would make clear, though – and we’ve said it before – is that the targets within the NVES are very challenging. That’s for us, and everybody else, automatically.
“We don’t walk away from that. It’s a reality.
“What [your vehicle line-up] is going to look like in 2028-29 is going to be very different to what you’ve got in 2025 and 2026. With the current mix now for Toyota, it’s very advantageous that we have hybrids. We’ve got one BEV, and we’ll have at least another two
by the end of 2026 … so suddenly, your portfolio, your credits, your outputs change again.
“We just get on with it. We are trying to build a self-sustainable model,” he said, implying that customers won’t bear the brunt of fines and penalties as Toyota will aim to have a mix of vehicles that meet the requirements by a balance of measures.
Some luxury brands find themselves in a relatively strong position, with a richer mix of internal combustion options and electrified and fully electric models.
BMW, for example, saw a higher take-up of electrified models in 2024 than regular ICE models: 49 per cent were, and 5 per cent were electrified – be that mild hybrid, plug-in hybrid or fully electric.
“You all know about the NVES targets coming in later this year; we are already in a strong position to meet the requirements,” said Brendan Michel, BMW Australia product manager.
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