Tesla Exits Australia’s Car Lobby Group Over Emissions Stand-Off

People look at a Tesla Model Y car at a Tesla showroom in Beijing on Jan. 5, 2021. Wang Zhao/AFP via Getty Images

Tesla has pulled out of Australia’s main automotive industry lobby group due to disagreements over its stance on the centre-left Labor government’s new car emissions restrictions.

The Federal Chamber of Automotive Industries (FCAI) has been critical of the new vehicle efficiency scheme (NVES), saying it would cause “significant disruption” for the industry, and result in “less choice and higher retail prices for Australian consumers.”

The NVES will effectively limit the type of vehicles importers can bring into the country based on the amount of emissions they produce.

Car Lobby Argues New CO2 Laws Will Drive Up Prices

FCAI Chief Tony Weber has warned the proposed CO2 scheme would cost consumers $29 billion as well as increase the price, for example, of a Ranger Raptor by $6,000, and other cars by up to $25,000.

The group said it had advocated for a “balanced and realistic” fuel efficiency standard.

“It is disappointing that after many years of inactivity by successive governments, it has opted to impose an [fuel efficiency standard or FES] with extremely aggressive targets and severe penalties, to be effective on very short notice (Jan. 1, 2025),” the lobby wrote in its submission.

The FCAI also disputed a key government paper, “Cleaner, Cheaper to Run Cars: The Australian New Vehicle Efficiency Standard,” that informed the new NVES laws, calling it “inaccurate.”

It said the implementation of the proposed targets would have “a disastrous commercial impact on many Original Equipment Manufacturers (OEMs) and may result in the exit of some models from the Australian market, if not the withdrawal of some OEMs entirely.”

“Increased OEM costs will undoubtedly be passed through to consumers as such costs will be substantial for many OEMs,” it said.

“If increased costs and lack of choice result in consumers retaining their aging vehicles for longer periods, the emissions reduction objectives of the Government will not be achieved.”

What Are the New Standards?

Labor’s NVES, which will come into force in January 2025, places an emissions cap on each automaker’s vehicle fleet that will become more stringent each year.

The government’s preferred solution—known as “Option B”—would require passenger vehicles and SUVs to reduce their CO2 emissions by an average of 12.2 percent annually, and utes and vans to reduce their emissions by 12.4 percent.

Manufacturers that meet or exceed these targets would be awarded credits which can be sold to companies that miss the targets.

Alternatively, carmakers that do not meet the required average, or cannot offset them by buying credits, face hefty fines.

Tesla Claims Car Lobby ‘Misleading’ Consumers

But the Australian branch of Elon Musk’s electric vehicle company took issue with the FCAI’s stance, accusing the car lobby of “misleading” and “deceiving” Australian consumers.

Tesla argued that it was “inappropriate” for the lobby group to “foreshadow or coordinate whether and how competitor brands implement price changes” in light of environmental regulations such as the NVES.

The company also accused the FCAI of running a “concerted public campaign” against the new car emissions legislation and of representing companies that did not take action on climate issues.

In a letter to the FCAI, Tesla claimed that the lobby’s warning of the price hike resulting from the government’s preferred rules was “demonstrably false.”

It also said the FCAI’s position was not aligned with that of some of its members, including Ford, Jaguar Land Rover, Volvo, and Mercedes-Benz, which had promised to cease selling combustion engine models in leading markets by 2035.

In addition, Tesla said that of the 20 top-selling vehicles in Australia that the FCAI has referred to, “11 are sold by companies that performed below their target for EPA (Environmental Protection Authority) standards in the USA.”

“Although many of these companies still sold highly polluting vehicles in the USA, they balanced out their sales with more efficient vehicles and paid no penalties under EPA standards in 2022,” the company said.

“If consumers believe that the FCAI truly speaks for car companies when claiming that more polluting vehicles will increase by as much as $13,000 next year, they may rush to purchase the most inefficient vehicles in anticipation of soaring resale values.”

One Major Car Manufacturer Disagrees

However, the FCAI is not the only vehicle group to take issue with the NVES.

In late February, Toyota Australia vice president of sales and marketing, Sean Hanley, argued that the proposed CO2 scheme would force car companies to raise the price of large fuel-hungry vehicles such as the LandCruiser, and light commercial vehicles like the HiLux.

Mr. Hanley also warned that Toyota would not purchase credits from other companies to meet its emissions targets and would instead, pass the cost onto consumers.

“We'd pay a fine, we’d pass it on,” he said, according to AAP.

Mr. Hanley said that unless the final scheme is less aggressive, it would “have a profound negative impact on regional and rural Australia” and the result would “reverberate throughout the Australian economy.”

“If we were to be fined, the margins and the investments that go into developing these [EVs with low emissions] is such that the customer would wear a good portion, if not all of it,” he added.

“I just can’t imagine how you can absorb these massive fines.”

Meanwhile, Nissan Australia said it supported the NVES but proposed numerous amendments, including allowing car makers more time to modify their vehicle range and model lineups.