What is NVES? The efficiency standard shaping new car showrooms

Walk through a new car showroom this year and you'll find petrol sedans, diesel utes, hybrids and electric SUVs parked side by side. Behind that mix sits a federal law most buyers have never read: the New Vehicle Efficiency Standard, known as NVES.

It doesn't ban any model, and it doesn't touch the car already in your driveway. What it does is set an average carbon dioxide target for each company that brings new cars into Australia, then lower that target every year. Here's how it works for car makers, and what it means for the range of new cars you'll see on the dealership floor.

What NVES is, and when it started

The standard is set by the New Vehicle Efficiency Standard Act 2024. According to the Department of Infrastructure, NVES commenced on 1 January 2025 and applies to all new cars supplied to Australia from that date.

The first reporting period, which the regulator calls a performance period, began on 1 July 2025 and ended on 31 December 2025. From 2026, each performance period runs for a full calendar year, from 1 January to 31 December. A dedicated federal body, the NVES Regulator, oversees the standard and publishes the results.

Who has to meet the targets

The obligation sits with what the Act calls regulated entities: vehicle manufacturers, suppliers or importers that hold a vehicle type approval for a covered vehicle and enter it on the Register of Approved Vehicles for the first time.

The regulator states that businesses which sell or distribute new or used vehicles without holding a type approval, such as dealerships, are not regulated entities. Neither are Australians buying a new or used car. The targets are a matter for the car brands, and your dealer's role stays the same: helping you find the right car from the range on offer.

Passenger cars and light commercials: two categories

NVES covers vehicles with a gross vehicle mass (GVM) of up to 4.5 tonnes, although vehicles over 3.5 tonnes GVM are currently exempt under the NVES Determination 2024. Covered vehicles are split into two types:

• Type 1: new light passenger vehicles, such as cars, SUVs and light off-road vehicles.
• Type 2: new light commercial vehicles, such as utes and vans, plus heavy off-road passenger vehicles.

The split matters because each type has its own target. A dual-cab ute that tows and carries for a living isn't measured against the same number as a city hatchback.

How the targets work

Each target starts as a headline limit, measured in grams of CO2 per kilometre, and the limits step down every year. The Minister for Transport has set them out to 2029:

Headline limits published by the NVES Regulator, checked 6 October 2026. Check the linked official source for the current figures.

The headline limit is then adjusted for each vehicle's mass, so a heavier car gets a higher target and a lighter car a lower one. A brand's result is worked out across its whole fleet for the year: each vehicle's CO2 figure is compared with its own target, and the differences are added up. That total is the brand's interim emissions value.

NVES doesn't tell car makers what to sell. It sets what their whole fleet has to average.

Units, trading and penalties

A brand whose fleet comes in under target is issued NVES units, which it can hold for up to three years or trade with another brand. A brand that finishes above target has two years to close the gap, either by supplying more low-emission vehicles in later years and earning units, or by obtaining units from another brand.

If a brand's final emissions value is still above zero after that, it receives an infringement notice, with a penalty equal to that value multiplied by $50. For the 2025 period, the last day to use units is 31 December 2027, and final values are issued from February 2028.

What the first year showed

The regulator published the first results on 18 February 2026. Between 1 July and 31 December 2025, 59 regulated entities entered 620,947 covered vehicles on the Register of Approved Vehicles. Forty of them beat their target, generating a combined 17.2 million units.

About 71% of covered vehicles were Type 1 and 29% were Type 2. Type 1 vehicles averaged 114 g/km against a headline limit of 141, and Type 2 vehicles averaged 199 g/km against 210. Twelve per cent of all covered vehicles were zero emissions, supplied by 40 entities.

What it means on the dealership floor

The Department is clear that NVES does not ban any vehicle models. Brands can still sell any vehicle type they choose, including sedans, four-wheel drives, utes and vans, but they need to sell more efficient models to offset less efficient ones. The standard is also technology neutral: fuel-efficient petrol and diesel vehicles count, as well as hybrids and electric cars.

As the limits fall, the Department says brands are incentivised to provide more choices of fuel-efficient, low and zero emission vehicles. The intent is a broader mix of drivetrains across the line-ups dealers carry, alongside the utes, wagons and family SUVs Australians already know, with those vehicles flowing into the second-hand market over time.

Nothing changes for cars already on the road. The Department says NVES only applies to new covered vehicles, and you don't have to modify or change your existing car.

To compare models before you visit, the federal government's Green Vehicle website has data and tools, including a fuel cost and CO2 calculator, and your dealer can walk you through the fuel consumption label on any new car in the showroom.

The bottom line

NVES is a rule for car brands, not for buyers or dealerships. It sets a falling average CO2 target for each brand's new passenger cars and light commercials, rewards brands that beat it, and gives those that miss it two years to catch up. Utes, four-wheel drives and family SUVs remain on sale. Your local dealership is where you can see a brand's line-up side by side and ask how each variant compares.