NVES explained: What Fleet Managers need to know

The New Vehicle Efficiency Standard (NVES) is Australia’s first national fuel-efficiency and emissions standard for new vehicles. It is established under the New Vehicle Efficiency Standard Act 2024 and sets average CO₂ emissions targets for new vehicles entering the Australian market from 1 July 2025.

The NVES applies to:

• Light passenger vehicles (cars, SUVs)
• Light commercial vehicles (utes and vans up to 4.5 tonnes GVM)

Emissions are measured in grams of CO₂ per kilometre (g/km) and targets tighten each year from 2025 to 2029.

Who does the NVES regulate?

This is a critical point for fleets.

Fleet operators are NOT regulated under the NVES.
The NVES applies only to:

• Vehicle manufacturers, importers and suppliers
• Entities that hold a vehicle type approval and enter vehicles on the Register of Approved Vehicles (RAV)

Fleet managers, leasing companies, dealers and end-users have no compliance obligations under the NVES.

What is the NVES trying to achieve?

According to the regulator, the NVES is designed to:

“Reduce car emissions and deliver a more fuel-efficient future for Australia.” 

The legislation aims to:

• Reduce transport emissions (light vehicles account for ~71% of transport emissions)
• Increase the supply of fuel-efficient and low-emissions vehicles
• Improve fuel security
• Lower running costs for motorists over time
• Improve air quality

How does the NVES work?

Each regulated entity must meet an average emissions target across all vehicles they supply in a given year.

Key features:

• Targets get lower each year (for both passenger and light commercial vehicles)
• High-emitting vehicles can still be sold
• Lower-emission vehicles offset higher-emission ones across a brand’s total sales mix
• Battery-electric, hybrid and very efficient vehicles help manufacturers beat the target

If a manufacturer beats its target, it earns NVES units.
If it misses the target, it must:

• Earn units in later years,
• Buy units from another manufacturer, or
• Pay a financial penalty

What does this mean for fleets?

While fleets are not regulated, the NVES will shape the market fleets buy from.

Over time, Fleet Managers should expect:

• More choice of low-emissions vehicles in all major segments
• Faster rollout of EVs, hybrids and more efficient ICE models
• Increased pressure on OEMs to prioritise lower-emission variants
• Greater alignment between emissions performance, Whole-of-Life Cost (WOLC) and procurement decisions

Importantly, the NVES does not ban utes, vans, 4WDs or towing-capable vehicles. Instead, it pushes manufacturers to improve efficiency across their range.

What the NVES does not do

For clarity, the NVES:

• Does not regulate fleet operators
• Does not force fleets to buy EVs
• Does not apply to vehicles over 4.5 tonnes GVM
• Does not restrict customer choice
• Does not set vehicle prices or mandate technologies

Why Fleet Managers should pay attention

The NVES is a supply-side policy, but its impacts will flow directly into:

• Model availability
• Lead times
• Powertrain mix
• Residual values
• Emissions reporting and ESG strategies

In short, the NVES will increasingly influence what vehicles are offered to fleets, even though fleets are not directly regulated.

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