The first performance results from Australia’s New Vehicle Efficiency Standard (NVES) show early progress on reducing fleet emissions — but industry leaders warn the transition remains fragile without stable demand-side support.
The National Automotive Leasing and Salary Packaging Association (NALSPA) has responded to the NVES Regulator’s 2025 results, which reveal that around 12 per cent of vehicles covered by the NVES were electric, while the remaining 88 per cent were internal combustion or hybrid models.
Two-thirds of suppliers exceeded their emissions targets, generating a net surplus of 15.9 million NVES units.
NALSPA CEO Rohan Martin said the results demonstrate that the policy is influencing manufacturer behaviour and improving vehicle efficiency across the market.
“The NVES is influencing manufacturer behaviour and improving vehicle efficiency. It’s increasing consumer choice in cleaner cars and lowering emissions on Australian roads. That is a really positive development from the Albanese Government,” Mr Martin said.
However, he cautioned that EV adoption remains at an early stage.
“However, with electric vehicles representing around 12 per cent of cars covered by the NVES in 2025, it’s still very early days of the EV transition. This is not yet a self-sustaining market.”
Supply and demand must work together
As NVES targets progressively tighten, manufacturers will need to increase the supply of zero-emission vehicles into the Australian market. According to NALSPA, that makes demand-side policy settings critical.
“As NVES targets tighten, car manufacturers will need to bring materially more zero-emission vehicles to the Australian market. That is where supply and demand policy must work in lockstep to proactively support and encourage consumer behaviour towards this technology,” Mr Martin said.
NALSPA argues that the Electric Car Discount — delivered primarily through novated leasing and the FBT exemption — remains the key demand-side mechanism supporting EV uptake among working Australians.
“The NVES provides supply and the Electric Car Discount encourages demand. Materially changing demand settings at this stage would risk slowing EV adoption and undermining the policy coherence between supply and demand reform,” he said.
“The Electric Car Discount is the policy doing the most to put EVs within reach of everyday Australians. Australia has more than 105,000 extra EVs on our roads thanks to the discount, with at least half of all EVs sold today supported by it. Many of the workers taking up the discount say they simply wouldn’t have considered making the switch without it.”
Implications for fleet buyers
For Fleet Managers and Finance Managers, the early NVES results suggest greater availability of lower-emission vehicles in coming years. However, NALSPA’s position highlights a broader risk: if demand-side incentives such as the FBT exemption are wound back prematurely, supply may outpace consumer and fleet uptake.
Medium-term emissions targets will require a substantial increase in the share of zero-emission vehicles entering the fleet over the next decade. For organisations developing fleet emission reduction plans, this reinforces the importance of monitoring both regulatory settings and financial incentives.
“The early NVES results show real progress, but they also underline that we are still in the early EV transition so stable and coordinated policy settings remain critical,” Mr Martin said.
For organisations planning fleet transitions, policy stability remains as important as vehicle availability.
