The New Vehicle Efficiency Standard (NVES), taking effect on 1 January 2025, is set to reshape the Australian automotive market by reducing carbon emissions from new passenger and light commercial vehicles.
Understanding NVES compliance is essential for fleet managers to avoid penalties and ensure that their vehicles meet the required standards.
This guide walks you through how to calculate your fleet’s compliance and manage the process efficiently.
Understanding How the NVES Works
The NVES applies to new vehicles entered into the Register of Approved Vehicles (RAV) from 1 July 2025 onwards. These vehicles are categorized as Type 1 or Type 2, with some exemptions outlined in the legislation.
Each vehicle is assigned an "emissions number," representing the amount of CO2 emitted per kilometre. This number is then compared to a calculated "emissions target" specific to the vehicle. The difference between these two values, summed across your fleet, gives you the Interim Emissions Value (IEV):
- A positive IEV means the fleet exceeds emissions targets.
- A negative IEV means the fleet is performing below the target, which is a good outcome.
To offset a positive IEV, suppliers can use emissions reduction credits known as "extinguished units." After accounting for these units, the Final Emissions Value (FEV) is determined.
Avoiding Penalties
Penalties are applied if the FEV is above zero at the end of the year. The penalty is calculated by multiplying the FEV by $100 for each gram per kilometre (g/km) over the target. For example, an FEV of 10 g/km would result in a $1,000 penalty.
In cases of minor breaches, an infringement notice may be issued, which reduces the penalty to $50 per g/km over the target.
Key Formulas for NVES Compliance
Here are the essential formulas to help you determine your fleet's compliance:
- Final Emissions Value (FEV):
FEV = IEV - U
Where:- IEV = Interim emissions value
- U = Units extinguished
- Interim Emissions Value (IEV):
IEV = Σ (Ei - ETi)
Where:- Ei = Emissions number for each vehicle
- ETi = Emissions target for each vehicle
- Emissions Target (ET):
ET = HL + (MAF × (DM - RM))
Where:- HL = Headline limit for the vehicle
- MAF = Mass adjustment factor
- DM = Designated MIRO (mass in running order)
- RM = Reference MIRO
Once you have all the necessary vehicle data, you can easily apply these formulas to calculate compliance.
Leveraging Car Subscription to Support NVES Compliance
Car subscription programs offer a flexible and innovative strategy for vehicle suppliers aiming to meet NVES compliance without the immediate pressure of selling vehicles. Since NVES compliance is measured at the point of importation, the vehicles brought into Australia for subscription services can contribute to emissions targets right away, even if they are not sold immediately.
By importing low-emission or electric vehicles (EVs) specifically for subscription fleets, suppliers can improve their overall emissions profile. The advantage of a subscription model is that it allows consumers to access these vehicles on a flexible basis, increasing the use of low-emission vehicles in the market without relying solely on traditional sales. This helps to:
- Offset higher-emission imports: By introducing a higher volume of low-emission vehicles into subscription fleets, suppliers can balance out the impact of higher-emission vehicles in their lineup.
- Avoid immediate sales pressure: Subscription allows vehicles to enter the market without the need for rapid sales, providing more time to meet consumer demand for low-emission options.
- Enhance fleet utilisation: Subscription programs also enable suppliers to maximize vehicle utilisation by offering multiple users access to a single vehicle over time, contributing to a more efficient and environmentally-friendly fleet.
Take Control of NVES Compliance with Loopit’s NVES Calculator
Navigating NVES compliance can seem complex, but Loopit has made it easier for fleet managers to understand and meet their emissions targets. To help you stay ahead of the 2025 requirements, Loopit has developed a simple and user-friendly NVES calculator. This tool is designed to streamline the compliance process, allowing you to quickly calculate your fleet's emissions performance and identify any necessary adjustments.
Whether you're managing a subscription fleet or a traditional vehicle fleet, our calculator provides clear insights into your NVES standing and helps ensure that you avoid costly penalties.
Contact Loopit today to obtain your copy of the NVES calculator and let us assist you in managing your fleet's compliance with confidence. Reach out to our team for more information and personalized guidance.
By understanding the NVES framework and following the outlined steps, fleet managers can ensure their vehicles meet the emissions targets, thus avoiding potential penalties. As Australia transitions to stricter emissions standards, proactive compliance will not only help avoid fines but also contribute to broader sustainability goals.
Disclaimer: This article provides general information and should not be considered financial or legal advice. Always consult with experts for specific guidance on NVES compliance for your fleet.
