#1 What is the New Vehicle Efficiency Standard (NVES)?
After years of consultation, the Australian Government will introduce a binding fleet-average New Vehicle Efficiency Standard on 1 January 2025.¹ The law sets a cap on the average grams of CO₂ each manufacturer’s newly-sold passenger cars and light commercial vehicles (LCVs) may emit each year. Suppliers that beat their target earn tradeable credits; those that miss must purchase credits or pay a civil penalty.² Credits and penalties will start to accrue from 1 July 2025, giving industry six months to finalise compliance systems.³
#2 Key numbers & timeline at a glance
| Year | Regulatory milestone | Indicative effect* |
| 2025 | NVES legislation commences (headline limits set to 2029) | Greater model choice in low- and zero-emission vehicles |
| 2026 | First annual compliance assessment; statutory review of targets | Adjustment of credit/penalty price; early resale signals |
| 2028 | Government’s preferred trajectory aligns Australia with current US fleet average | New petrol & diesel models must be roughly 20 % more efficient than today⁴ |
| 2030 | Passenger-car emissions expected to be 60 % lower than pre-NVES and LCVs roughly 50 % lower⁵ | Running-cost gap between efficient and inefficient vehicles widens |
*Figures are drawn from the Government’s February 2024 Impact Analysis options B/C and Ministerial statements.⁴⁵
#3 How will the NVES work in practice?
- Attribute-based targets – Each brand receives a CO₂ ceiling that varies with the mass in running order of the vehicles it sells, accommodating utes and SUVs while still ratcheting down overall fleet emissions.¹
- Credit market – One credit represents 1 g CO₂ /km below target for one vehicle, bankable for three years and tradeable via a government-run registry.²
- Penalties – Suppliers whose fleet average exceeds the limit must surrender credits or pay a monetary amount set by regulation.³
- Testing cycle – Vehicles are measured under the current NEDC protocol, transitioning to WLTP as Euro 6d noxious-emission standards phase in from December 2025 to July 2028.⁶
#4 Why does the Standard matter to used-car owners?
Although the NVES regulates new vehicles only, it will reshape the second-hand market in several ways:
| Impact mechanism | What happens | Likely resale-value effect |
| Fuel-cost differential | Dept. of Infrastructure modelling estimates $108 billion in cumulative fuel savings to 2050; an average buyer in 2028 saves ≈ $1,000 a year at the pump.⁵ | Buyers pay more for cars that cost less to run; efficient ICE, hybrids and EVs should command stronger prices. |
| Model-mix shift | Manufacturers channel more low-emission variants to Australia to avoid penalties.¹ | Supply of efficient cars rises; demand for older high-CO₂ models softens, especially post-2027. |
| Policy signalling | Clear government trajectory (review in 2026, five-year rolling targets) reduces uncertainty.³ | Markets tend to “price in” future running-cost & compliance risks 12-24 months ahead; early sellers of thirsty vehicles may fare better. |
| Household budgets | ABS CPI weightings show motor-vehicle spending rising amid fuel-price volatility.⁷ | Cost-conscious households gravitate to efficient cars, lifting resale for compliance-ready nameplates. |
#5 Who are the short-term winners and losers?
| Segment | 2025-26 outlook | 2027-30 outlook | Notes |
| EVs & PHEVs | Modest price easing as supply improves; government charging-infrastructure grants to dealerships.⁴ | Strong resale; zero-tailpipe-CO₂ vehicles generate multiple credits for first owners. | |
| Hybrids & efficient small ICE | Healthy demand; some models may attract “super-credit” multipliers under future rules.² | Remain attractive as fuel-price hedge; resale supported. | |
| Large petrol SUVs / V8 utes | Possible pre-NVES rush as buyers lock in last batches. | Depreciation accelerates once higher running costs and credit penalties become visible in new-car RRPs. | |
| Older—pre-Euro 5—used cars | No direct regulation, but higher comparative fuel bills. | Gradual loss of desirability unless classic or niche. |
#6 Five practical tips to protect (or boost) your car’s resale value
- Document real-world fuel economy – Keep a fuel logbook; tangible proof of efficiency reassures prospective buyers.
- Stay on top of servicing – A fully-stamped book becomes even more valuable when efficiency is legislatively prized.
- Highlight any factory “green tech” – Stop-start systems, mild-hybrid batteries or low-rolling-resistance tyres can differentiate your ad listing.
- Consider timing – If you own a high-consumption model you plan to sell anyway, doing so before mid-2026 may yield a stronger price.
- Get multiple valuations – Use data points (dealer trade-in, online instant offers, private-sale platforms) to see how the NVES narrative is already influencing offers.
#7 Looking further ahead
- A statutory review in 2026 could tighten post-2029 targets.³
- States and territories may begin aligning stamp-duty or registration formulas with CO₂ ratings, amplifying running-cost differences.
- The ABS transport basket will continue to update weights; in 2024 the Motor vehicles weight rose by 0.26 percentage points on record purchases, signalling enduring consumer interest in newer, more efficient cars.⁷
Bottom line
The 2025 NVES is not a “ban” on any type of car, but it does tilt the economics of motoring decisively toward efficiency. Over the next five years that tilt will flow into the used-car yard. Owners of fuel-efficient or low-emission vehicles can expect firmer resale prices, while sellers of thirsty models may want to move earlier rather than later. Keeping meticulous maintenance records and understanding your vehicle’s official CO₂ rating will help you stay ahead of the curve—and maximise the dollars in your pocket when it’s time to sell.
Government sources referenced
- Department of Infrastructure NVES overview page. Infrastructure and Transport Dept
- NVES FAQ—credit/penalty mechanics. Infrastructure and Transport Dept
- New Vehicle Efficiency Standard Bill 2024 Digest (Parliamentary Library). Home
- Minister for Infrastructure media release “An Australian-made New Vehicle Efficiency Standard”. Infrastructure Ministers
- “Cleaner, Cheaper to Run Cars” Consultation Impact Analysis, February 2024. Infrastructure and Transport Dept
- Exposure Draft—Australian Design Rule 81/03 (WLTP transition). Infrastructure and Transport Dept
ABS “Annual weight update of the CPI and Living Cost Indexes”, January 2025. abs.gov.au
