Mazda, Nissan, Hyundai and Subaru face multi-million-dollar penalties under NVES
Several major car brands face heavy penalties under the efficiency standards scheme. (ABC News: Jackson Stephens)
In short:
Mazda has incurred a $25.4 million liability in the first results of the Albanese government's emission laws for cars, alongside liabilities for Subaru, Nissan and Hyundai.
The New Vehicle Efficiency Standard, which began in July, becomes stricter each year, pushing car makers to sell more cleaner cars or else risk heavy fines.
What's next?
Car makers will have to meet stricter emissions rules for 2026 — with those facing penalties required to buy credits from greener companies or sell cleaner cars to escape a fine.
Major car brands are staring down the barrel of multi-million-dollar penalties for exceeding their emissions, the first results of the federal government's climate laws for new vehicles have revealed.
The New Vehicle Efficiency Standard (NVES) requires car makers to meet emissions limits on the total cars they sell each year, incurring a $50 liability for every gram of CO2/km over that limit, which must be paid as a penalty or traded with greener car makers that accrued credits.
The liabilities are due to be paid in three years' time, meaning the car makers can also reduce their liability by selling more cleaner cars in the next two years.
But a third of car brands selling to Australia have already fallen into the red in the first and easiest year of the scheme, which gets stricter every year to 2029.
In the first six months of the NVES, Mazda has incurred a $25.4 million liability, Subaru a $7 million liability, Nissan a $10.8 million liability and Hyundai a $4.2 million liability.
Several luxury brands, including Aston Martin and Ferrari, have also incurred smaller liabilities.
It will mean those companies will have to change what they sell in future years if they want to avoid generating even larger liabilities.
Auto industry expert Matt Hobbs said there were early signs some car makers had a massive task ahead to change the cars they were selling in Australia.
"It's not surprising that a lot of the car companies have been OK this first year, because the government knew that they couldn't change their model line-ups quickly," Mr Hobbs said.
"But there are some that you look at and go, 'Wow, they have already got some problems.' And that is a bit of a surprise."
Meanwhile, electric vehicle companies have generated massive credits which they will be able to trade with companies like Mazda and Nissan to get them out of the red, providing a financial advantage to EV sellers.
Chinese electric vehicle maker BYD, which generated more than six million "NVES units", could by itself cover the total liabilities of all car makers in the first year, which totalled 1.2 million units.
'Price shock' avoided in first year of NVES
Two-thirds of car makers beat their emissions targets, including brands like Toyota that had flagged concerns that the scheme could be too punishing on an industry that planned production three years in advance, and would have little time to adjust.
The industry warned that if the scheme was too stringent, it could force up the prices of some of Australia's most popular car models by thousands of dollars.
The NVES has tightened already from January of this year, with the emissions limit on passenger cars falling from 141g/km to 117g/km, pushing more vehicles into the column that will incur liabilities for car makers, and generating fewer credits for those still below the limit.
Mr Hobbs said it remained to be seen whether the government had struck the right balance.
"This was a soft start to a scheme that is going to get really tight, really quickly, and some of these car companies still have to make big changes," he said.
"But because of the way it was designed, we still haven't seen a price shock.
"But by the time you get to 2028 and 2029, those targets are hard to hit, so these companies are most definitely sitting in rooms all over the world working out how to make this work in Australia, and whether they change what they sell, or the amounts, or the technology — they will all be in the mix at the moment."
Transport Minister Catherine King said the results "make it clear the NVES supports both lower emissions and consumer affordability".
"These first NVES results show that cleaner vehicles and a competitive market can go hand in hand," she said.
The Coalition campaigned unsuccessfully at the 2025 federal election to repeal the NVES penalty.
Toyota, Volkswagen, Kia and others still selling petrol cars have also managed to generate credits which could help to avoid liabilities in future years, or else be traded off.
The government said sales figures had shown a strong increase in electric vehicle sales over 2025, which made up 12 per cent of all vehicles covered by the NVES in its first six months.
Last week, the Trump administration axed similar emissions requirements for cars in the United States, adding to global uncertainty for the industry.