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Top car makers and industry groups have pushed back on changing regulations that currently allow them to stockpile electric cars and profit from their rivals' struggles to meet tough emissions rules.
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EXCLUSIVE
Some of Australia's top car makers have pushed back against closing a loophole that could allow them to 'dump' thousands of excess hybrid and electric cars in holding yards to help beat tough penalties for missing government CO2 targets.
The rules, known as the New Vehicle Efficiency Standard (NVES), count vehicles towards a car maker's emissions average when, or before they arrive in Australia, not when they are sold.
It opens the door for low-emissions cars to be stockpiled – long before they reach customers – in order to bank 'credits', which can be sold at a premium to rival car brands struggling to meet the rules, or kept in-house to offset dirtier models in the line-up.
Pushback from a top industry group representing car makers has prompted the Federal Government to delay a potential change to the rules, Drive can reveal.
The identity of the organisation has not been directly named, but in a separate statement, the chief body representing new-car makers in Australia, the Federal Chamber of Automotive Industries (FCAI), said it supports leaving the rules as-is.
It argues that changing the rules so soon after they are introduced would "inject significant additional cost" and backtrack on "millions of dollars" already invested by car brands to meet the current scheme.
Mazda boss and FCAI board chair Vinesh Bhindi said that before the NVES came into effect, car brands and the industry body campaigned to have vehicles counted at the point they're sold, but were unsuccessful in swaying the government.
However, he said that as "we've all built IT systems and protocols to capture" the rules as they are today, changing them so soon would be "wasting energy and time".
Yet Toyota, whose local CEO is FCAI deputy chair, has called for the loophole to be closed, while BYD, Chery, Hyundai did not express a preference to Drive, Kia said it is working to meet the rules as they stand, and the likes of Ford, Isuzu, MG, Mercedes-Benz, and BMW declined to comment.
GWM said it is happy with the current rules – though opened the door to change – while Mitsubishi said it would give feedback through the FCAI, Nissan said it looks forward to discussions as part of the policy's planned 2026 review, and Volkswagen said it would evaluate any changes as they roll out.
The loophole will now be addressed no sooner than sometime in 2026, rather than earlier suggestions that it could occur in 2025, either before or shortly after the scheme began tracking vehicle arrivals in July last year.
Electric-car specialist Tesla has called it an "unwarranted" delay in addressing a "known loophole," it said in a statement to Drive, which allows brands to "game the scheme through practices like the 'dumping' of excess vehicles onto the Australian market for banking credits."
The NVES legislation was introduced last year to encourage the sales of low-emissions vehicles, and penalise car brands that sell too many high CO2 models, by tracking emissions across each vehicle they bring to Australia.
It currently sees vehicles counted once they are added to a database known as the Register of Approved Vehicles, something that typically occurs upon or shortly before their arrival in Australia – but that can take place as early as the car boarding a ship in its country of manufacture.
Importantly, vehicles are counted well before they are sold to customers, let alone even registered by dealers as demonstrators for test drives.
With the policy now in place, it opens the door for car brands to stockpile thousands of low- and zero-CO2 cars to accrue emissions credits – well before they are sold – that can offset popular higher-emissions models.
The targets become more stringent each year, so hybrid and electric vehicles stockpiled in 2025 would accrue more credits than in 2026 or 2027.
Conversely, car brands can rush to certify masses of high-emissions cars in November or December of a calendar year, so they have a reduced effect on their emissions average, compared to the same vehicle imported in January.
Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King, said in 2024 that the government would "look to move to compliance at the point of sale, including through the review of the scheme to be undertaken in 2026".
Federal regulators announced in March 2025 that they would "prioritise work to count emissions under the New Vehicle Efficiency Standard at the point of sale, rather than when a vehicle is imported to Australia", but the trail ran cold.
A spokesperson for the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts has told Drive "the benefits and costs of changing the point of compliance" wouldn't be considered until the NVES scheme's "2026 statutory review".
Drive understands that earlier discussions between the Federal Government and the auto industry on the proposed change were not met with overwhelming support, prompting the delay.
In particular, Drive has learned that one particular lobby group representing car manufacturers supported continuing to count vehicles when they are added to the database, and not closing the loophole.
Other organisations representing car manufacturers were open to changing the rules to count vehicles when they are sold, it is understood, but also supported keeping the legislation as-is.
In contrast, many of the groups representing car dealers – who are at risk of being saddled with masses of low-emissions cars they cannot sell, so their manufacturer can meet CO2 targets – were in favour of a rule change, Drive has been told.
The identity of the car makers that did not want the rules changed – and those, as well as dealer associations, who did – have not been explicitly named by Drive's source.
However, Tony Weber, the chief executive of the Federal Chamber of Automotive Industries, said in a written statement to Drive: "The existing point of compliance arrangement is clear and foundational to how the scheme operates.
"At this early stage of implementation, that setting should remain unchanged. Any further adjustment would inject significant additional cost.
"This is not desirable at a time when households are already under significant pressure from the cost of living and NVES is likely to increase vehicle prices," he said, adding that "brands have already invested millions of dollars to align with the Government’s compliance regime".
The board of the FCAI is led by the bosses of Mazda and Toyota, and also includes Nissan, Jaguar, Land Rover, Honda, Renault, BMW, the distributor of Subaru and Peugeot cars, and the parent company of Jeep, Alfa Romeo, and more.
"We support a move to point-of-sale reporting under the NVES framework," said Aman Gaur, EVC head of legal, policy and advocacy, "this would enable comprehensive government reporting of vehicle sales data that could be made available to all Australians, free of charge."
James Voortman, Australian Automotive Dealer Association (AADA) CEO, said in a written comment to Drive that "emissions under NVES must be counted when a consumer purchases and drives the vehicle, not when a vehicle is loaded onto a boat headed to Australia."
BYD came under scrutiny last year after it was seen using the overflow car park of the Jamberoo water park in New South Wales as storage for "thousands" of unregistered hybrid and electric cars.
There was no indication given that these vehicles were stored for a purpose related to the emissions legislation, and it told media outlets including News.com.au, which broke the story, that the cars were stored at Jamberoo for "temporary" purposes by "a storage and logistics partner".
A BYD Australia spokesperson told Drive that the brand "does not have an official position" on whether how vehicles are counted under the NVES should be changed, and that it will "comply with whatever procedures are in place."
It is understood that the Federal Government has commissioned and received a report from consultancy firm Ricardo on the benefits of changing when vehicles are counted under the NVES.
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Alex Misoyannis has been writing about cars since 2017, when he started his own website, Redline. He contributed for Drive in 2018, before joining CarAdvice in 2019, becoming a regular contributing journalist within the news team in 2020. Cars have played a central role throughout Alex’s life, from flicking through car magazines at a young age, to growing up around performance vehicles in a car-loving family. Highly Commended - Young Writer of the Year 2024 (Under 30) Rising Star Journalist, 2024 Winner Scoop of The Year - 2024 Winner
