'They won't survive': Australia now has vehicle emissions laws and this is the truth behind the New Vehicle Efficiency Standards that has divided the car industry

The New Vehicle Efficiency Standards (NVES) was formally passed into law this week in Federal Parliament, which officially starts the clock for car brands to cut emissions or exit the Australian market.

After an investigation by CarsGuide it appears increasingly unlikely not all brands will be able to meet these new standards and could quit the Australian market by the end of the decade.

“Some of these brands will exit the market,” said a well-placed industry source, who spoke on the condition of anonymity as they were not authorised to speak on the matter publicly.

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“If these companies are unable or unwilling to meet the market, then that’s it - they won’t survive.”

The brands most at risk are the ones with limited, or no, plans for electric vehicles - as these are key to dragging down the fleet average emissions - and those focused on larger vehicles, primarily SUVs and utes.

But this is only part of the problem facing the Australian car industry. Our investigation has uncovered more details of the extent of the rift between the car companies and the peak body that is meant to represent it to the government, the Federal Chamber of Automotive Industries (FCAI).

The FCAI conducted an overtly anti-electric vehicle campaign as soon as NVES was publicly announced, which has already resulted in Tesla and Polestar quitting the body, but internal documents obtained by CarsGuide under the Freedom of Information Act, reveal more details on the peak body’s stance on NVES.

Speaking to CarsGuide in March, FCAI CEO Tony Weber indicated his public statements, in particular comments around EV sales having reached a “plateau”, were at the direction of the FCAI board, then chaired by Vinesh Bhindi from Mazda, with Toyota’s Matthew Callachor and Mitsubishi’s Shaun Westcott as Deputy Chairs, along with representatives from Honda, Ford, Hyundai, Nissan, Stellantis and Inchcape Australia (Subaru, Citroen and Peugeot).

The NVES was passed into law this week in Parliament.

“We're a broad church,” he said in March. “Yeah, there's no doubt about that, and that's why we have a constitution that actually sets out the fact that it is ultimately the decision of the board. So all the decisions we've made and our response to the government through the consultation impact analysis response has been done through the board.”

However, an internal FCAI document of talking notes prepared by third party government relations consultant, The Civic Partnership, in November 2023 was tabled as part of a Senate enquiry and features several potentially inflammatory remarks about the members the FCAI is meant to represent.

CarsGuide has obtained a copy of the document via the Freedom of Information Act, despite an effort from the FCAI to block it from going public.

In a letter dated April 19, 2024, Mr Weber wrote a letter to Mr Patrick Hodder, Committee Secretary for the Finance and Public Administration Reference Committee in the Senate, explaining the document.

The letter read, in part: “The FCAI requested that access to the documents be denied on a number of bases including that the material was provided as full and frank advice to government relating to complex policy issues and that the restriction of such advice in the future could hamper the deliberation of government and would not be in public interest.”

Car makers will soon be penalised for selling high polluting vehicles.

In the original November document, the FCAI labelled car companies as “almost schizophrenic” on the issue of electric cars and accused them of misleading the public on their true opinions of EVs.

“OEMs [original equipment manufacturers] are almost schizophrenic on the issue,” the document read. “There is an inherent contradiction between broader policy questions in the automotive industry and the competition between brands in the market place. Many OEMs will be privately critical of the policy settings in this area but will publicly position themselves from a marketing perspective to embrace it. This leads to the announcement of EVs that are planned in a situation where there are no real plans to actually build and provide them.”

Such comments are unlikely to be well-received by the FCAI membership, especially brands investing in EVs, as a supporting multi-page document went into great detail of just how limited EV options could potentially be in the near-future.

Weber explained his stance in his April letter to the Senate Committee, writing: “In relation to the comment 'almost schizophrenic', the FCAI refers to the comments in the document itself, which references inconsistencies in positions held by companies in respect of the broader policy question, their competitive positioning and their ability to deliver new vehicles against certain timelines. I refer to the Cambridge Dictionary definition of the term as 'having qualities or attitudes that are different from each other and that do not work well together.’”

The November talking notes paper also likened the discussions around a vehicle emissions standard to the Voice to Parliament, the referendum on Aboriginal and Torres Strait Islander people being recognised in the constitution, which became a controversial and divisive public debate. 

EV only brands such as Tesla will benefit from the legislation. (Image: Richard Berry)

It read: “The issue is like the Voice - most people are supportive of the concept, until they see the detail. Once it becomes a cost of living and consumer choice argument, its [sic] dead.”

Instead, the FCAI was asking for a “more cautious approach” that would “allow more time to monitor progress” of changing technology and consumer trends. This was despite the Federal Government discussing fuel efficiency standards with the industry since 2010 and Australia being one of only two developed nations in the world without any such public policy - the other being Russia. Publicly, at least, many car brands have been either advocating for, or supportive of, a fuel efficiency standard in Australia for many years.

With the new standard officially law, car companies now have to begin cutting emissions by July 1, 2025. While the car industry was able to get some key concessions, namely having body-on-frame SUVs reclassified as light-commercial vehicles and therefore subject to a higher CO2 emission figure than passenger cars, every OEM across the market except Tesla, Polestar and any new all-electric brand face significant challenges meeting the dramatic cuts.

As our insider made clear, brands without access to electrification - and even some with access to hybrids and plug-in hybrids - will really struggle to meet the passenger vehicle average target of 58g/km of CO2 by 2029, which will need to come down from 141g/km from 2025. Even with the concessions on utes and body-on-frame SUVs the ‘29 target of 110g/km will be challenging for brands based on modelling CarsGuide has seen.

Regardless of the challenges and the internal politics, the rapid passing of NVES through both the House of Representatives and the Senate on a single day, with no committee hearings, underlined how seriously the government took finally putting into place some regulation for the Australian car industry.