Vehicle emissions rules could save Australia billions, report predicts

New data has highlighted that strong ‘fuel efficiency standards’ could save Australia up to $13.6 billion by 2035 – boosting EV supply, while cutting fuel bills for new petrol- and diesel-powered vehicles.

Ahead of the federal government’s landmark ‘fuel efficiency standards’ policy due later this year, the report by research firm Mandala – commissioned by lobby groups Electric Vehicle Council and Climate Council – projected that full EVs will match the price of internal combustion engine vehicles by 2028.

It predicted the price of EVs will fall by an average of 2.8 per cent each year due to gradually decreasing battery costs, whereas the price of conventional petrol and diesel cars will rise by 1.4 per cent per year.

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However, it admitted the carbon emissions mandate will contribute to slightly higher prices for the latter, due to the need for automakers to fit costly technologies to reduce emissions, such as hybrid systems.

While it ultimately benefits buyers with decreased fuel consumption and running costs, some carmakers have already warned about discontinuing budget-friendly petrol cars amid forthcoming strict Euro 7 emissions mandates overseas.

Additionally, the report estimates that in 2027, a new EV owner could save nearly $10,000 in ownership expenses (i.e. fuel/charging and maintenance) after 10 years, while a new combustion engine vehicle owner would save up to $800 in the same period.

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Australia can save billions in fuel, environmental, health expenses

The report modelled data based on three scenarios, with all assuming 100 per cent new EV uptake in Australia by 2035.

At the time of publication, only the nation's capital has committed to exclusively sell new EVs from 2035.

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In context: Australia’s vehicle emissions

Currently, more than 85 per cent of vehicles sold globally are covered by a carbon emissions mandate – which aims to limit harmful locally-produced pollutants.

The report claims new combustion-engined passenger cars in Australia emit up to 1.5 times more carbon dioxide than those in Europe, whereas it’s 1.4 times more for light commercial vehicles.

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The forthcoming Australian fuel efficiency standard will mandate a cap on the average carbon exhaust emissions of all vehicles a carmaker sells each year.

It will theoretically boost the supply of EVs to Australia and increase competition to drive down prices, while lowering the emissions footprint and fuel consumption of petrol- and diesel-engined vehicles.

But, the Climate Council has also urged for the policy to not have any loopholes or concessions, such as allowing high-emitting carmakers to purchase carbon credits – a strong revenue source for Tesla, one of the world’s largest EV makers.