Australia is set to implement the New Vehicle Efficiency Standards (NVES) in 2025, a move designed to align the automotive industry with global efforts to reduce greenhouse gas emissions and tackle climate change. These standards represent a significant shift in the automotive landscape, with far-reaching implications for fleet managers across the country. With a focus on improving fuel efficiency and reducing CO2 emissions, the NVES provides a framework that can help fleet managers achieve their organisation’s sustainability goals while also offering potential cost savings.
Why are New Vehicle Efficiency Standards being introduced?
The driving force behind the introduction of NVES in Australia is twofold: to reduce CO2 emissions and to stimulate the supply of more fuel-efficient vehicles. Australia’s commitment to the Paris Agreement means that the country is aiming to reduce greenhouse gases to 43% of 2005 levels by 2030, with the broader target of achieving net zero by 2050. Transport accounts for a significant share of emissions, making it a priority area for government action.
At the heart of the NVES is the need to shift the national vehicle fleet towards cleaner, more efficient technologies. The standards require vehicle manufacturers to meet specific average CO2 targets for the vehicles they sell. If manufacturers exceed these targets, they will either have to trade credits with other suppliers or pay penalties. For fleet managers, this means that over time, they will have access to a wider range of low or zero-emission vehicles.
How Fleet Managers can benefit from NVES
The introduction of NVES presents a range of benefits for fleet managers, particularly in the areas of CO2 reduction, fuel efficiency, and long-term cost savings.
1. Reducing CO2 emissions
Fleet managers play a crucial role in helping organisations meet their sustainability targets. One of the most direct ways to reduce an organisation’s carbon footprint is by lowering the emissions produced by its vehicle fleet. Under the NVES, manufacturers will be incentivised to bring more fuel-efficient and electric vehicles (EVs) to market. These vehicles will produce significantly less CO2 compared to older models, directly helping fleet managers contribute to their organisation’s sustainability goals.
For example, popular models like the Toyota RAV4 Hybrid currently emit 107 grams of CO2 per kilometre, while the Toyota Corolla Hybrid emits just 83 grams. As more of these low-emission models become available, fleet managers will be able to make environmentally responsible choices without compromising on vehicle performance.
2. Long-term cost savings on fuel
Fuel efficiency is a key component of the NVES, and fleet managers stand to benefit from the resulting cost savings. The link between fuel consumption and CO2 emissions is clear—lower fuel consumption equals lower emissions. For example, every litre of petrol consumed produces 2.31 kg of CO2, and diesel generates 2.68 kg. By switching to more fuel-efficient vehicles, fleet managers can not only reduce emissions but also cut down on fuel costs, which can be a significant expenditure for fleets.
As new, more efficient vehicles enter the market, fleets will be able to reduce their fuel consumption. For instance, a move from a vehicle that consumes 10 litres per 100 km to one that consumes 8 litres represents a 20% reduction in fuel costs. Over time, this can translate into substantial savings, particularly for fleets that clock up high mileage.
3. Access to government incentives
Fleet managers may also be able to take advantage of government incentives designed to promote the uptake of low-emission vehicles. These could include tax breaks, rebates, or credits for purchasing electric or hybrid vehicles. For example, novated leasing, which allows employees to salary-package their vehicle, is likely to become even more attractive with the growing availability of fuel-efficient cars. Government policies such as the Electric Car Discount Bill have already influenced consumer behaviour, with more buyers opting for electric vehicles.
4. Planning for future fleet composition
The introduction of NVES will require fleet managers to think strategically about their future vehicle acquisitions. The standards will not only apply to passenger vehicles but also to light commercial vehicles (LCVs), such as the Toyota Hilux and Ford Ranger, both of which are widely used in Australian fleets. Under the new rules, manufacturers will need to balance the sale of higher-emission models like these with lower-emission vehicles to meet their overall CO2 targets.
By 2029, the standards will have tightened considerably, meaning that fleet managers who plan ahead and start integrating more low-emission vehicles into their fleets will be better positioned to meet these targets without disruption. Vehicle models such as the Mitsubishi Outlander Plug-in Hybrid, which emits just 35 grams of CO2 per kilometre, provide a glimpse of the kind of options that will become more widely available as manufacturers adapt to the new standards.
Challenges and opportunities for Fleet Managers
While the NVES offers significant benefits, it also presents challenges that fleet managers will need to navigate.
1. Supply constraints and lead times
One potential challenge is the availability of low-emission vehicles. As manufacturers adjust to the new standards, there may be supply constraints, particularly for popular models. For example, Toyota’s RAV4 Hybrid has been in high demand, with some fleet customers facing long wait times. Fleet managers will need to plan their vehicle acquisitions well in advance to ensure they can secure the models they need.
2. Towing and payload capacity
For fleet managers responsible for vehicles that require towing or heavy payload capacities, such as in industries like construction or logistics, the NVES will pose additional considerations. While vehicles like the Ford Ranger and Toyota Hilux are currently dominant in this space, their future iterations will need to incorporate new technologies to meet emission targets without compromising on performance.
3. Maintenance and operational costs
Fleet managers will also need to consider the long-term maintenance and operational costs of new vehicle technologies. Electric vehicles, for instance, typically have lower maintenance costs due to fewer moving parts. However, repairs, particularly for more complex systems like batteries and charging infrastructure, could require specialised knowledge and equipment.
Preparing for the transition
The key to navigating the introduction of NVES successfully is early preparation. Fleet managers should begin by conducting a detailed audit of their current fleet, assessing which vehicles are likely to be affected by the new standards and identifying opportunities to transition to lower-emission models. Telematics and fleet management software can also play a role in optimising fleet operations, ensuring that vehicles are being used as efficiently as possible.
Additionally, fleet managers should engage with vehicle manufacturers and suppliers to understand what new models will be available and how these will fit into their overall fleet strategy. This will ensure that they can make informed decisions about vehicle acquisitions and avoid potential supply issues.
The New Vehicle Efficiency Standards represent a significant opportunity for fleet managers in Australia to lead the way in reducing CO2 emissions and achieving sustainability goals. By adopting more fuel-efficient and low-emission vehicles, fleet managers can not only contribute to their organisation’s environmental targets but also realise significant cost savings over time. While challenges such as supply constraints and maintenance costs may arise, careful planning and strategic decision-making will allow fleet managers to capitalise on the benefits of the NVES and help shape a greener, more sustainable future for the Australian fleet industry.
