| Media item | |
| | Rising car prices at centre of NVES fears | GoAuto News,
Sandringham
by Neil Dowling
| 20 Mar 2024 | | General News - Page 35 - 1680 words - ID 2051129772 - Photo: Yes - Type: News Item - Size: 1040.00cm2 | |
Critics fear NVES price rises will stop consumers from updating to better technology
WHAT Australian motorists can choose to buy for their next vehicle, and whether they can afford to buy their ideal choice, continues to fragment opinion about the proposed National Vehicle Efficiency Standard (NVES).
GoAutoNews Premium has previously reported on submissions to government and the commentary of industry players including the AADA, MTAA, VACC, Cox Automotive, EV Council, Barbara Kiss, Pitcher Partners, RACQ and numerous car companies.
The submissions fall under the proposal for a NVES that aims to favour the sale of vehicles with lower emissions. The federal government says it will introduce legislation underpinning its NVES plan no later than January 1, 2025.
Further to the submissions published by GoAutoNews Premium, other groups have responded.
These include the Commonwealth Bank's sustainable economist John Oh, writing on the subject, who said NVES would introduce targets to reduce tailpipe emissions of new vehicles by 60 per cent between 2024 and 2029.
Vehicles cars, SUVs, utes, vans and light trucks contribute 60 per cent of Australia's total transport emissions and represent 10 per cent of total emissions.
Much of the conversation shows the NVES appears to target commercial vehicles (workhorse vehicles) and the businesses that use these vehicles. In fact, it will affect every new-vehicle sale and affect every motorist who plans to buy a new car.
Because NVES proposals include penalties (taxes and/or charges) as a means of deterring the purchase of vehicles with high emissions of carbon dioxide, prices of these vehicles will rise.
Ultimately, to get lower emissions from the cars we buy, Australian consumers will pay more.
Australia and Russia are claimed (by the Housing Industry Association in its NVES submission) to be the only "advanced global economies" without an emission standard for vehicles. The argument is that without a standard, consumers are free to buy whatever they can afford without regard for the environment.
But if Australia adopts the standard in its current form, new-car buyers will inevitably pay more for their vehicles.
The Australian Chamber of Commerce and Industry (ACCI) submission stated that Australian consumers pay much higher prices for vehicles than consumers in Europe, the US and most other developed countries.
"Any new policies or standards must have regard for the affordability of vehicles, while maintaining the diversity of makes and models," it said.
"The proposed NVES adopts a heavy-handed regulatory approach that is likely to substantially increase the cost of vehicles to Australian consumers.
It applies significant penalties to the vehicle manufacturer, which will be passed on to the domestic automotive dealer and ultimately to the consumer, with sharp increases in the retail price of a number of vehicles." The ACCI said that penalties being proposed "are significant and will add substantially to the cost of many new vehicles." "At 2.3 kg of CO2 per litre of fuel burnt, every 1L/100km difference in fuel efficiency at the proposed penalty of $100 per g/km will add $2300 to the cost of a vehicle imported into Australia," it said.
"These costs will increase when taxes, retail margins and other charges are applied." Commercial vehicles, particularly utes and vans and SUVs, have the biggest emissions and fuel consumption levels compared with passenger cars.
The ACCI said current average fleet emissions for passenger vehicles are 141g/km (which equates to an average fuel efficiency of 6.0L/100km) which will need to reduce to 58g/km (2.5L/100km) to meet the proposed 2029 target.
For LCVs current average fleet emissions of 199g/km (8.5L/100km) will need to be reduced to 81g/km (3.4L/100km).
There are currently no internalcombustion engine (ICE) vehicles, and very few hybrid vehicles, in the market that can achieve the 2029 targets.
Many proponents of the NVES have linked its methodology with the US model, based on the similar mix of vehicle types sold and especially the high volume of commercial vehicles led by utes.
The ACCI sees benefits in aligning NVES with the US model but argues that if Australia follows the US, it should be wholly adopted and not be just a partial adoption.
"The structure of the US fuel efficiency standards is very different from the one that is being proposed for Australia in the consultation paper," the ACCCI said.
"The US fuel efficiency standard exempts vehicles weighing the equivalent of 3.6 metric tonnes. This explains the prevalence of utes and larger utility vehicles on American roads, as they are not covered by the US fuel efficiency standards.
"If the Australian government wishes to align the NVES with the US fuel efficiency standard, then it should apply the same weight load exemption as the US 3.6 metric tonnes.
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Continued from previous page "This would exempt larger fourwheel drives and some utes from NVES, ensuring farmers, trades people, utility and emergency services have access to the vehicles needed to support their business and operations." The ACCI also recognised that the US has subsidies and exemptions for large commercial vehicles which are not (yet) mentioned in any proposal for Australia and should be adopted to maintain an accurate adoption of the US model.
Australian Automobile Association (AAA) managing director Michael Bradley said: "Regulation to modernise Australia's vehicle fleet would benefit some consumers and impose costs on others, and the government must be more open about both sides of this equation if it is to garner community support and reduce political division.
"The AAA encourages both sides of politics to work towards implementing an efficiency standard that is both ambitious and achievable." The government says its proposed plan will align Australia with the equivalent regulation in the US by 2028, which the AAA would consider as being sensible.
However, the AAA submission questions how the government's preferred model would do this given: The US EPA's standard excludes heavier pickup trucks The US has not locked in its targets beyond 2026 (and recent media reports suggest proposed USA targets beyond 2026 are being reconsidered) The US EPA's standard allows the pooling and trading of various credits which make it easier for car-makers to comply The USA uses a different laboratory test procedure to determine vehicle CO2 emissions The USA standard uses different methodology to measure vehicles (footprint vs mass).
In addition, the US Inflation Reduction Act provides subsidies and credits to makers and buyers of cleaner cars, which include: Payments of up to up to $US7500 ($A11,340) per vehicle $US3 billion ($4.54b) to the Advanced Technology Vehicle Manufacturing Loan Program (to subsidise the manufacture of vehicles and their components) $US2 billion ($A3b) to the Domestic Manufacturing Conversion Grants, (to fund manufacturers' retooling of production lines for clean vehicles) $US3 billion ($A4.54b) for electrifying the US Postal Service fleet, including vehicles and charging infrastructure $US1 billion ($A1.5b) to states, municipalities, Indigenous tribes, or non-profit school transportation associations to replace heavy-duty vehicles with EVs Commercial Clean Vehicles Credit to defray up to 30 per cent of the cost of replacing ICE commercial vehicles with electric vehicles A credit of up to $US4000 ($A6047) per vehicle under the Previously-Owned Clean Vehicles Credit to support used vehicle buyers who choose to go electric.
The AAA said that in addition, 19 US states offer additional incentives for EV buyers of up to $US7500 ($A11,340) per car.
TheAAAsubmission "congratulates the government on committing to the development of a NVES and encourages the government to be more transparent with its modelling and its quantification of the impacts of its preferred option on different vehicle categories, vehicle types and vehicle models".
The AAA said the government paid Acil Allen $A748,545 for economic analysis associated with the development of the NVES "but this work is not publicly available".
It said it was "very concerned by the lack of detail in the government's published analysis on the achievability of its preferred targets, particularly those relating to 4WDs and the light commercial fleet".
The AAA submission says: "Before a NVES is legislated, the AAA would like different vehicle buyers to be able to fully understand the positive and negative impacts of the standard on their future vehicle choices.
"Given the global lack of affordable and ready alternatives for existing popular vehicles, it is incumbent on the government to provide robust analysis showing how it sees its headline targets for light commercial vehicles being met." The HIA submission said it wants utes and other LCVs excluded from NVES, saying that applying stringent efficiency standards with harsh penalties will substantially drive up the price of these vehicles.
"While utes are classified as light commercial vehicles, which have a slightly higher CO2 target, more concerning is that the NVES will treat large four-wheel drives, such as the Toyota LandCruiser, Ford Everest and Isuzu MU-X, as passenger vehicles," the HIA submission said.
"Despite having the same chassis and drivetrain as utes, because of their body shape they are classified as passenger vehicles.
"As a result, these large four-wheel drives will be required to meet the same low CO2 emissions targets as the smallest four-cylinder cars.
"It will not be possible for them to meet the low emissions targets set for very small vehicles, so the price of these vehicles can be expected to increase dramatically under the new penalties." The HIA said that utes and fourwheel drives "are essential vehicles for trades people as well as those who work in agriculture, tourism, utility and emergency services".
"They are particularly important in rural and regional Australia where they are driven long distances, often over very rough roads or off-road, and either tow or carry heavy payloads.
These vehicles are the most reliable and pragmatic tool.
"A practical solution is to exclude utes, vans and other key light commercial vehicles purchased by trades people, regional Australians and emergency services from the aggregate fleet CO2 emissions reduction target applied to manufacturers." The Commonwealth Bank sustainability economist John Oh said that in the long term "the NVES sends a strong signal to vehicle manufacturers to supply a greater number of low-emission vehicles into Australia".
"The biggest question, in our view, will be whether vehicle manufacturers pass on the credits and debits (or penalties) to consumers."
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