The Federal Chamber of Automotive Industries (FCAI) strongly supports the introduction of a fuel efficiency standard (FES) into the Australian market.
The FCAI has consistently advocated for a balanced and realistic FES that accommodates consumer vehicle preferences, does not result in unaffordable price hikes for new vehicles, and achieves meaningful emissions reduction targets. The FCAI supports the introduction of a FES on a ‘modest start, fast finish’ basis to achieve required out-year emissions reductions while accommodating model development and the life cycle of vehicles in order to avoid sudden consumer price shocks.
To be effective, a FES must account for the unique characteristics of the Australian market. The Australian automotive industry represents less than 1.5% of the global industry, and all new vehicles sold in Australia are imported. More than 70% of global automotive markets are made up of left-hand drive (LHD) vehicles. Australia is very much a ‘technology taker’, rather than a ‘technology creator’, and so must work (as a minor player) to develop and implement a bespoke local automotive plan in an industry marked by extended time frames, and where product allocation decisions are made based on a global product strategy.
Australian consumers overwhelmingly purchase sports utility vehicles (SUVs) and light commercial vehicles (LCVs) as the vehicles most suited to their work and lifestyle needs. In 2023, SUVs and LCVs accounted for nearly 80% of sales and comprised all the top ten vehicles sold throughout the year.1 Right hand drive (RHD) battery electric vehicle (BEV) models in the segments demonstrably preferred by Australian consumers (and at a price point aligned to current choices) do not exist in any market in the world at this time.
It is disappointing that after many years of inactivity by successive Governments, it has opted to impose a FES with extremely aggressive targets and severe penalties, to be effective on very short notice (1 January 2025). The FCAI opposes the Government’s preferred New Vehicle Efficiency Standard (NVES) Option B as currently drafted. The FCAI believes that Option B will cause significant disruption for large sections of the industry, and will result in less choice and higher retail prices for Australian consumers. Implementation of the proposed targets on the proposed timeline with the proposed penalties will have a disastrous commercial impact on many Original Equipment Manufacturers (OEMs) and may result in the exit of some models from the Australian market, if not the withdrawal of some OEMs entirely. Australian consumers will have less choice in their selection of available vehicles. Increased OEM costs will undoubtedly be passed through to consumers as such costs will be substantial for many OEMs. If increased costs and lack of choice result in consumers retaining their aging vehicles for longer periods, the emissions reduction objectives of the Government will not be achieved.
The FCAI is concerned that much of the analysis and assertions made throughout the Government’s paper, Cleaner, Cheaper to Run Cars: The Australian New Vehicle Efficiency Standard. Consultation Impact Analysis (CIA) which inform the selection of Option B, is inaccurate. It is of concern that the Government has not released its underlying research for consideration and comment by stakeholders. In contrast, information provided by the FCAI throughout this submission is based on research and data compiled by S&P Global, as well as other data sources including industry leading VFACTS data.
Read the full submission and recommendations at the link below.