Australia finally has vehicle emissions regulations, but what does that mean for new car buyers?
The federal government’s New Vehicle Efficiency Standard (NVES) became law on January 1.
The NVES will penalise carmakers $100 for every gram of CO2 emitted over a certain threshold per vehicle they sell. This threshold gets lower every year until 2030.
Utes and big four-wheel drives have easier targets to meet, but most vehicles currently on sale will struggle to meet those targets within a year or so.
The NVES is a complicated piece of legislation that allows carmakers to offset sales of high-polluting vehicles with sales of hybrids, plug-in hybrids and electric cars.
They’ll need to sell a substantial amount of those vehicles to avoid penalties.
This spells bad news for Australia’s love affair with high-polluting diesel utes and 4WDs.
Toyota Australia Vice President Sales, Marketing and Franchise Operations Sean Hanley said the company was in good stead for the next few years but the regulations would become challenging from 2027.
When asked if the company would ever pass on penalties on to consumers he was unsure.
“It’s not as easy to just sit up here and say, ‘Oh, increase the prices to offset penalties’, because the market’s so competitive you may not be able to do that,” said Hanley.

“So the idea is, you’d never rule out the fact that prices may need to rise at some point, but that would be a last resort.”
Toyota — Australia’s most popular car brand — sold about 90,000 HiLuxes, LandCruisers and Prados in 2024.
It also sold around 110,000 hybrid vehicles and close to 1000 electric cars, which will help blunt the effects of NVES.
He said that would be the ideal strategy to nullify any penalties headed Toyota Australia’s way.
“You look at mix, you look at your hybrid mix, and try to offset those penalties against credits and deliver within your own brand.”
Hanley said the company wasn’t anti-NVES and recognised the need for emissions regulations but queried the speed it was being implemented.
“If I had one request for the opposition or the government, it might be to please consider the timing. Not get rid of it, but just consider the timing.”
This would give the company more time to bring lower-emissions vehicles to market and help the public transition to electric vehicles.
Hanley said by 2030 the HiLux ute and LandCruiser 4WD will have some form of electrification, whether that is hybrid, plug-in hybrid or full electric he wouldn't say.

It does show that there is help on the way to aid the company’s popular big-rigs avoid paying NVES penalties when they really start to bite in 2027.
Hanley also confirmed the company would have two more all electric models on sale by the end of 2026.
He said the NVES has made it advantageous for carmakers to sell more electric cars, which was the aim of the federal government when it proposed the laws.
“The truth of the matter is we have one BEV.”
“We didn’t set lofty targets on that BEV because we knew at the time when we were launching that car that the market was limited. We predicted that the market would be what it is in BEVs.
“Having said that, then comes along New Vehicle Efficiency Standards (NVES) where it is advantageous actually to sell more BEVs in the future to offset carbon penalties and to get credits allowing you to sell more of other vehicles that Australians want.”
Toyota Australia has a plan to avoid passing the cost of the fines onto consumers, but only time will tell if the last resort becomes a reality.