New Vehicle Fuel Efficiency Standard and National Electric Vehicle Strategy (2022-2024)

Policy Engagement Overview

Policy Engagement Trends – Since Government Announced Policy (February 2024 onwards)

In February 2024, the Australian government announced its proposed New Vehicle Efficiency Scheme (NVES) that would bring Australia’s CO2 standards in line with U.S. by 2028, with a new consultation on the policy running until March 2024.

• Following the announcement, FCAI's Chief Executive, Tony Weber, emphasized concerns around potential costs and the availability of vehicles regarding the proposed standard in a press release, noting "there is a great deal of further analysis to do". Many other FCAI members responded to announcement, with the media reporting positive statements in support of the proposed standard from automakers including Hyundai and Polestar, and Volkswagen. In contrast, media reports noted that Mazda had negatively urged the government to delay the standard, while Toyota criticized the proposal as "too ambitious" and pushed for weaker rules.
• A week after the announcement in February 2024, ABC News reported that both Hyundai and its subsidiary Kia, and Volkswagen, supported the Australian government's proposed new vehicle efficiency scheme.
• In March 2024, the FCAI released its NVES consultation response. It opposed the Australian government’s proposed CO2 standards and advocated to severely weaken the rule's stringency, pushing to increase 2029 targets of 51g/CO2 for passenger vehicles up to 84g, and to increase the proposed 81g/CO2 for light-commercial vehicles to 131g. FCAI also advocated making the first two years of the standard “reporting-only”, delaying its introduction, to include off-cycle, AC, and multiplier credits in the standard, and opposed including SUVs in the passenger vehicle categories.
• On March 7th, 2024, the Guardian reported that Tesla had left the FCAI over its continued advocacy campaign to weaken and delay the government’s proposed CO2 standards, criticizing the FCAI’s "demonstrably false" claims that the NVES would drive up car prices. Following this, on March 8th, 2024, the Guardian reported that Polestar had also quit the FCAI over its active campaigning against the standard by it and other member companies.
• On March 8th 2024, Reuters reported that Volkswagen had publicly backed the government’s proposed CO2 standards, in contrast to the FCAI and Toyota's reported negative positioning. Following this, on March 11th 2024, Reuters reported that Volkswagen had quit the FCAI's policymaking committee to further distance itself from the FCAI campaign against the proposed CO2 standards.

Policy Engagement Trends – Fuel Efficiency Standards Consultation (May 2023)

Overall engagement with the Fuel Efficiency Standards consultation appeared to be positive, with a total of 14 companies and industry associations in InfluenceMap’s database submitting a response. All respondents supported the introduction of a fuel efficiency standard, however only 5 (36%) supported ambitious standards, 3 (21%) took more mixed or unclear positions and 6 (43%) appeared to advocate for low stringency standards.

• Support for an ambitious fuel efficiency (CO2) standard was led by Tesla, Polestar (Volvo Cars), Electric Vehicle Council and Carbon Market Institute. All groups advocated for stringent Australian CO2 emissions standards for light-duty vehicles in line with either New Zealand, the EU, or the US. All these groups, except Carbon Market Institute, also directly advocated against the inclusion of flexibilities such as off-cycle and AC credits that may weaken the stringency of the standard. Tesla also advocated against the use of multiplier credits in the standard, while the Electric Vehicle Council and Polestar advocated there should be “minimal” concessions and bonus credits. The Carbon Market Institute did note that if credit banking is permitted, it should be approached with caution.
• Automotive-sector opposition to a stringent fuel efficiency standard continued to be led by the Federal Chamber of Automotive Industries (FCAI), which advocated for numerous exceptions that would weaken the policy’s stringency, including the need for a “cautious start” and the use of multiplier, off-cycle, and air conditioning credits. While the FCAI did not appear to state support for specific fuel efficiency target figures, unlike its October 2022 NEVs response, it continued to emphasize numerous concerns around stringent standards. The Japan Automobile Manufacturers Association (JAMA) and its members Mazda, Toyota, and Toyota-subsidiary Lexus similarly advocated for the inclusion of multiplier, off-cycle and air conditioning credits in the standard. Toyota and Lexus stated that “the FCAI current industry code provides a logical baseline” to the standard. Mazda advocated that the FCAI’s low-stringency voluntary standards “could form a strong basis for a mandatory fuel efficiency standard”. JAMA similarly “requests that an Australian FES not significantly divergent from the FCAI’s voluntary regulation”.
• Other automakers supported some elements but not others or adopted unclear positions on the policy. While Nissan supported “annual rates of reduction of other major markets, like the EU or US” year-on-year, it pushed back against an overall CO2 target equal to the US or EU and advocated to include multiplier, off-cycle and air conditioning credits in the standard. Volkswagen appeared to positively advocate against the use of air conditioning and off-cycle credits in the standard, while more negatively supporting multiplier credits for BEVs and PHEVs (although not HEVs). Ford Motor appeared to take an unclear position on the standards in their response.
• Other groups stated general support for adopting a fuel efficiency standard, while supporting an unclear level of ambition, such as the Ai Group. BP also supported the adoption of a fuel efficiency standard, however it also advocated for flexibilities that may weaken the stringency of the policy.

Policy Engagement Trends - National Electric Vehicle Strategy (October 2022)

InfluenceMap has detected that the overall engagement with the fuel economy standards in the October 2022 National Electric Vehicle Strategy consultation is largely supportive of stringent CO2 standards. Entities holding supportive positions included cross-industry business associations and utility companies, while automaker positioning ranged from negative to positive. However, much of the supportive engagement around potential Australian CO2 standards for vehicles did not advocate for specific high-stringency standards, instead only offering broad support for introducing CO2 standards.

• Overall engagement with the National Electric Vehicle consultation appeared to be positive, with a total of 31 companies and industry associations in InfluenceMap's database submitting a response to the consultation in October 2022. Of these respondents, 18 entities (58%) appeared supportive of ambitious standards, 4 entities (13%) appeared to oppose stringent CO2 standards for vehicles, and 9 entities (29%) took an unclear, mixed, or no position on such standards.
• Support for a stringent fuel economy standard in the October 2022 consultation was expressed by entities such as the Electric Vehicle Council, Tesla, Macquarie Group, Clean Energy Council and Energy Efficiency Council. All these groups advocated for Australia to introduce CO2 standards for vehicles in line with those in either the EU, US and/or New Zealand.
• Automotive-sector opposition to a stringent fuel economy standard is led by the Federal Chamber of Automotive Industries (FCAI), and the automakers (and FCAI members) Hyundai and Toyota Motor. All three groups advocated in the October 2022 NEVS consultation to introduce low-stringency CO2 standards aligned with FCAI voluntary standards (100g/km CO2 for light-duty & 145g/km CO2 for heavy-duty SUVs and light-commercial vehicles by 2030) that are less stringent than EU CO2 standards for light-duty vehicles, introduced in 2020. FCAI, Hyundai, and Toyota also conditioned their support for CO2 standards on numerous qualifying factors, including introducing consumer incentives and charging infrastructure development, and that the standards be based on Australian market conditions. Other automakers, such as Ford Motor and Mitsubishi Motor, did not appear to take a clear position on CO2 standards in their consultation responses.
• Many other groups stated general support for introducing CO2 emissions standards for light-duty vehicles in Australia, without clearly referencing a level of ambition supported. These include AGL Australia Business Council of Australia, BP, and Origin Energy.