The implementation of new regulations around vehicle efficiency when fleets have only just started transitioning to electric or hybrids, or have yet to begin, has created turbulence in automotive markets and unpredictability across OEM supply chains.
Strategic adjustments made by OEMs to meet the new vehicle efficiency standard’s (NVES) emissions limits will have a central and outsized role in reshaping the vehicle market and the way fleets are managed.
Compliance obligations for the NVES began on 1 July (although penalties won’t be enforced until 2028), and according to consultancy Fifth Quadrant, this is already changing the trajectory of the vehicle market.
Fifth Quadrant said: “OEMs are expected to prioritise compliant stock, limit non-compliant supply, and accelerate hybrid, zero and low-emission vehicle rollouts.
“In this environment, fleet managers will need to rethink vehicle selection, diversify supplier relationships, and build more flexibility into vehicle sourcing and replacement plans.”
Fit-for-purpose options may be limited, especially for commercial and specialist segments, according to Fifth Quadrant, and some alternatives may not meet operational needs.
Fleet managers will need to balance NVES compliance and cost with requirements such as payload, range, durability and maintenance needs.
Fifth Quadrant indicated that risk around procurement and vehicle sourcing was growing, with vehicle availability constraints potentially increasing lead times and reducing traditional benefits such as OEM volume discounts.
A limited supply may also shorten procurement windows, resulting in reactive replacement planning. This kind of unpredictability can significantly impact budgets and business continuity for fleets operating on thin margins and with fixed service obligations.
Looking ahead, Fifth Quadrant predicted that changing model availability, emissions thresholds, and supply dynamics would force fleets to reassess their procurement strategies.
This included building flexibility into vehicle selection and acquisition, and actively engaging with external suppliers and OEMs to gain insights into product roadmaps, stock availability, and potential resale support programs.
The Federal Chamber of Automotive Industries (FCAI) has warned that skyrocketing electricity prices, lack of public recharging options, and total cost of ownership create headwinds for EV adoption, requiring a coordinated effort to make the transition viable for all Australians.
It noted that a lack of consumer demand was the primary risk to the NVES’ success and suggested government inaction was hindering the market.
Tony Weber, Chief Executive Officer at FCAI, said that other barriers included affordability, infrastructure and consumer confidence.
He pointed to the low EV market share of 7 per cent of new vehicle sales as proof that demand was insufficient, and described NVES targets as aggressive and becoming more stringent every year until 2029.
On the other hand, the Electric Vehicle Council (EVC) has a more optimistic forecast, with EVC Chief Executive Officer Julie Delvecchio noting the NVES was already successfully providing Australian drivers with a rapidly growing range of modern vehicles to reduce emissions, lower fuel costs, and deliver community-wide benefits.
EVC figures showed that electric vehicles now represented more than 11 per cent of new vehicle sales in 2025 – a new record and up 17 per cent on the same period last year.
EVC attributed this growth in part to the NVES, claiming it had doubled the number of EV models available to Australian buyers since the standard was first proposed.
The council also cited the growth in EV availability across vehicle categories, such as utes, vans and SUV models, as evidence that consumer needs were being met, as well as dismissing the FCAI’s view by asserting that affordability had improved.
Regardless of the competing narratives, vehicle procurement strategies should be based on long-term organisation goals, which would put fleet managers in a better position once the NVES is properly incorporated into the market.
Fleet managers should, in particular, focus on the fundamentals, noting the fleet’s sustainability targets, assessing the total cost of ownership, and evaluating the operational fit of new low-emission vehicles.
