What is NVES? The New Vehicle Efficiency Standard sets new emissions targets for new cars and light-commercials that manufacturers must meet or face penalties. The targets are averaged across each manufacturer’s range of vehicles sold in Australia. The more low-emission vehicles, eg EVs in a brand’s range compared with ‘dirty’ fuel vehicles, essentially the better the outcome for that manufacturer. The new standard commenced on 1 January 2025.
Supporters of the policy claim it will boost sales of EVs, bring Australia in line with global trends and contribute to achieving emissions targets and save car owners on fuel costs. Detractors essentially say it will increase the price of new non-electric vehicles.
According to the Government, this new policy will encourage manufacturers to bring more ‘cleaner' cars into the Australian market and provide buyers with a greater choice of EVs. While the penalties for exceeding the targets will apply to the manufacturer, it is possible that the cost will be passed onto buyers with higher vehicle prices for some models from some brands.
For buyers in the market for a new car this year, there are many aspects of the new Standard to consider. In regard to motor vehicle finance, the Standard does not affect the types of loans and how loan offers are made. But the price of the vehicle being financed can affect the funding required. To assist buyers to better understand this major change to the Australian motor vehicle market, we cover off on a few of the issues in as simplistic terms as possible. Our brokers are on hand by phone or online, to assist with specific questions about your vehicle finance.
What is NVES? Simple Explainer
The New Vehicle Efficiency Standard sets a CO2 target for all new cars sold in Australia. Different targets apply to passenger cars and light commercials with 4500kg GVM or less. The emissions for each vehicle in a brand’s range are checked and averaged across the maker’s range. Manufacturers must offer more fuel-efficient and low-emission models to meet the targets and offset the dirty fuel models, or they are fined.
The new Standard brings Australia’s current emissions standards into line with Europe and other parts of the world. The Standard only applies to new not used cars.
We appreciate that buyers will have many questions about this change and we encourage you to refer to the dedicated website which addresses many issues.
What is NVES Effect on New Car Ranges?
The Standard is a major change for the Australian car market, and it is expected that buyers will see a change in the range of vehicles available. Vehicles that do not meet the targets are not banned. But manufacturers will likely start introducing more hybrids and EVs into their ranges. Where manufacturers are unable to offset less efficient models in their ranges with the more fuel-efficient models, buyers may see some models discontinued.
Manufacturers with numerous hybrids and EVs in their line-ups may easily meet their targets. Those that sell more of the less-efficient models may not meet the target and those brands may be where buyers see the most changes. Changes in model line-ups or changes in prices to cover the fines faced by manufacturers.
The penalties come into effect a few years down the track as the standards for emissions become tighter each year. Buyers still keen on purchasing a high-emission model may see price increases. The way the policy is applied to car manufacturers is complex with ranges assessed yearly and given interim emission values. If the brand does not meet the required target, they are given time to, and if the target is not achieved, a penalty schedule comes into effect.
It should be stressed that car buyers do not receive the fines for buying high-emission vehicles. The manufacturer faces the penalty, but some are reported as saying this cost will need to be passed onto buyers with price increases. How much the price of a particular model may rise by, and when, will vary across the market.
With a greater selection of hybrids and EVs expected on the market, we may see better pricing on these models. The higher price of EVs compared with petrol models has been seen as major barrier to going electric for many buyers. Could be the time to reconsider your EV options. Though the FCAI says the Government will need to do more around supporting EV sales in order to achieve its NVES targets.
What is NVES Impact on Car Finance?
Key to many new vehicle purchases is the finance. The cost of the vehicle affects how much a buyer needs for the loan and that in turn affects repayments. The new Standard won’t affect the features and benefits of Personal Secured Car Loans and Business Vehicle Finance products, the rates, terms and the way that lenders approve loans.
One consideration is the loan applicant’s approved credit amount if vehicle prices are affected with this new Standard. Buyers considering different models – low and high emission options, can use our Finance Calculator to quickly estimate their loan to assist with their buying decisions.
To answer queries about what is NVES and its effect on your motor vehicle finance, contact Jade Car Loans 1300 000 003.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.
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