Two-Thirds of Car Companies Meeting Australian CO2 Emissions Targets

Two thirds of of car companies selling in Australia already comply with the Labor government’s carbon reduction targets, new data reveals.

The Albanese Labor government’s New Vehicle Efficiency Standard (NVES) sets carbon dioxide limits on the average emissions of new cars sold in Australia.

The targets under the NVES in 2025 were 141 grams per kilometre on average for passenger cars, and 210 grams per kilometre on average for light commercial vehicles.

A 2025 performance report released on Feb. 18 showed that 40 vehicle brands met or beat their CO2 emissions targets, while 19 fell short. In percentage terms, 68 percent of companies complied or outperformed, while 32 percent missed their targets.

Car makers that exceed their annual emissions cap could face a $50 charge for every unit of CO₂ above the limit.

However, vehicle brands have until the end of 2027 to improve their position before penalties apply. They can do this by either buying carbon credits from other companies or selling more low emissions vehicles.

Among car companies that did not meet the government’s emissions targets between July 1 and Dec. 31, 2025 were Mazda, Nissan, Subaru, Hyundai, Honda, and General Motors.

Luxury brands including Aston Martin, Ferrari, Jaguar, and Rolls‑Royce also fell short.

Meanwhile, companies that met or exceeded their targets and generated credits included Tesla, BYD, Anhui Jianghuai (JAC), Chongqing Changan Automobile (Deepal), BMW Australia, Toyota, Kia, Isuzu, Ford and Mitsubishi.

The NVES legislation passed in 2024.

Labor Says Competition Remains Strong

In response, the Labor government said competition in the vehicle market remained strong even with new climate obligations.

“These results show that overall vehicle emissions are reducing whilst vehicle choice and affordability is being maintained for Australian consumers,” the government said.

It noted about 12 percent of vehicles covered by the NVES were electric, while 88 percent were internal combustion or hybrid.

“Australians continue to have a choice across a wide variety of vehicles. These results make it clear the NVES supports both lower emissions and consumer affordability,” said federal Transport Minister Catherine King.

Opposition Planning to Cut Emissions Limits

In his first press conference as Opposition Leader Angus Taylor criticised net zero and pledged to deal with emissions limits on family cars.

“Australia needs an energy policy that is based on common sense, not Labor’s net zero ideology,” Taylor told reporters at Parliament House on Feb. 13.

“We will get rid of Labor’s bad carbon taxes on their family vehicle, on manufacturing and food in this country, and of course, on electricity,” he said.

2029 Target Will be a Challenge: Auto Industry

The Federal Chamber of Automotive Industries (FCAI) Chief Executive Tony Weber said car makers “responded quickly” to the task of meeting the 2025 targets, but warned the 2029 targets would be harder.

“An increase in the range of zero and low emission vehicles available in the Australian market have supported the achievement of the first-year targets,” he said.

“To support the emissions reduction objectives, car makers have increased the range of EVs with more than 100 EV models available to consumers.”

Weber said EVs make up just 8.3 percent of new vehicle sales in 2025, noting that this figure would need to increase.

“This is a major concern because an increase in EVs on Australian roads is critical to the achievement of the stringent government targets which reduce each year to 2029,” he added.

How Will the NVES Limits Get More Stringent in Future?

By 2029, for type one passenger cars, the allowable fleet average drops to 117 grams per kilometre in 2026, 92 grams in 2027, 68 grams in 2028, and 58 grams by 2029.

For type two light commercial vehicles, the limits fall to 180 grams in 2026, 150 grams in 2027, 122 grams in 2028, and 110 grams by 2029.

“The targets are lowered each year, providing an incentive for regulated entities to reduce the emissions of their fleets over time,” the government said.