4 days ago
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Car brands set to fall foul of inbound Australian CO2 targets for new cars can purchase 'credits' from the Geely-affiliated electric-car brand to avoid government fines.
Electric Cars
Electric-car specialist Polestar says it is open for business to help other car brands facing hefty government fines under fresh NVES emissions rules for new vehicles sold in Australia.
Car brands who do not meet the CO2 emissions targets introduced by the Federal Government this year can purchase 'credits' from other manufacturers who beat the standards, in order to offset their average and avoid paying fines.
Polestar – which only sells electric vehicles (EVs) that produce zero tailpipe CO2 – has become the first car maker in Australia to express interest in selling emissions credits it earns to other brands.
But it remains to be seen who takes up its offer locally, as Australian executives from some leading manufacturers have previously told Drive they have no intention to buy credits that would, in effect, fund their competitors.
Estimations by Drive suggest that despite selling just 1713 cars in 2024, Polestar could offset the equivalent of $29 million in government fines for other car brands.
It could balance out the penalties from more than a year of Suzuki Jimny sales – or four months of Nissan Patrol V8 deliveries – excluding the cost to a manufacturer of buying the credits.
Polestar head office has forecast revenue in the "three-digit million-dollar [USD]" range from the sale of CO2 credits globally "in the coming years" amid "traditional OEMs [brands] struggling to transition to EVs".
Tesla says it earned $US2.1 billion ($AU3.3 billion) from selling CO2 credits globally over the first nine months of 2024.
It includes $US890 million ($AU1.4 billion) between April and June alone, equivalent to the sale of about 20,000 new cars.
"From a global standpoint, it's considered that there's significant opportunity in the revenue stream that will come from carbon credits given that Polestar remains committed to a strictly electrified future," Polestar Australia managing director Scott Maynard told Drive.
"We're seeing a lot of interest from brands. The administration of that will be a global decision, so that will come from our head office.
"But there is absolutely opportunity in Australia for sure.
"We can see that through the NVES, it's pretty clear there will be a few brands that will end up seeking credits and it's quite clear that we'll end up with some, so there's definitely some opportunity there, yeah."
Under Australia's new emissions rules – known as the New Vehicle Efficiency Standard (NVES) – the rated CO2 output of each car sold by an automaker is compared against a target based on the vehicle's weight and type.
If a vehicle exceeds the limits, it adds to a car brand's 'emissions value' for the year, while cars that beat the targets lower the average.
Its annual vehicle sales are averaged out over the calendar year, and if a brand is left with an emissions value above zero – meaning its line-up, on average, has not met the targets – it will be fined $100 per gram per kilometre of CO2, per vehicle it has exceeded the targets.
The fines can add up quickly, as 20,000 sales of a vehicle which exceeds its CO2 target by 10g/km equates to a $20 million penalty – unless it can be offset by vehicles that meet the rules.
Polestar and Tesla stand to benefit, as they do not sell any vehicles that emit CO2, so they will never rack up fines.
However, that relies on other car companies being willing to purchase so-called 'carbon credits' from their rivals.
"We'd have a philosophical problem buying credits of something we don't have an ownership stake in," Toyota Australia sales and marketing boss Sean Hanley told local media in March 2024, when the NVES was in its early stages of planning.
"I mean, we have our own research and development, there's a cost involved in that.
"I'll never say that you'd never consider things like that, because it's far too early in this whole debate and this whole understanding to say that, but our going position right now is that we would need to pay the fines."
Kia Australia boss Damien Meredith told Drive in May: "Our aim is to have a break-even situation. We won’t be buying credits and we won’t be selling credits."
Electric Cars Guide
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
