BYD, Tesla, Toyota could cash in on CO2 carbon trading scheme

BYD, Tesla and Toyota have emerged as the biggest winners from the first six months of Australia’s New Vehicle Efficiency Standard (NVES), while Mazda, Nissan and Subaru face potential multi-million-dollar carbon liabilities under the new regime.

The NVES – labelled a ‘carbon tax’ by some critics – penalises car-makers that exceed fleet-average CO2 limits while rewarding those that come in under the mandated thresholds.

The NVES Regulator has released its first official performance data for the July–December 2025 period, marking the beginning of what the Federal Government describes as a ‘tradable unit market’.

Under the scheme, interim emissions values, or IEVs, are accrued by brands that exceed their CO2 target. Those car-makers with negative balances (which makes the whole shebang confusing) effectively hold credits that can be sold to other car-makers.

Mazda currently holds the largest balance at 508,517 IEVs. You can check out the current six-month carbon credit tally here.

The regulator does not set the price of IEV units tradable between car brands, but given that balances must be zeroed after three years at a price of $50 per unit payable to the government, that would equate to a potential liability of more than $25 million for Mazda if it settled that way today.

And if car-makers are late with their penalty payments, the $50 per unit price doubles to $100 per unit.

Nissan (215,261 IEVs) and Subaru (139,635 IEVs) are the only other brands to have exceeded 100,000 units after the first six months.

However, brands are not required to clear their balances for three years, giving manufacturers time to adjust product line-ups and improve fleet averages.

Mazda, for example, has two zero-emissions vehicles due this year – the all-electric Mazda 6e sedan and Mazda CX-6e SUV – which could significantly reduce its IEV tally as time goes on.

At the other end of the ledger, BYD holds a staggering -6,282,824 IEVs, theoretically worth around $314 million at $50 per unit. Even if it traded its IEVs at one tenth the value, it would still pocket $30m.

Toyota (-2,890,625) and Tesla (-2,212,093) are also sitting on sizeable surpluses.

While the $50 figure provides a benchmark, the actual trading price can be negotiated privately between brands, meaning high-volume credit holders such as BYD wield considerable bargaining power.

That said, Toyota’s strong early position may not be secure.

NVES settings will tighten in 2027, with diesel ladder-frame vehicles facing a significant compliance hurdle. 

Given Toyota’s heavy reliance on HiLux, Prado and LandCruiser 300 Series turbo-diesel sales, the brand’s balance sheet could shift dramatically when the new thresholds take effect.

To put it mildly, the diesel ladder-frame ramp-up is extreme.

According to the Federal Government, around two-thirds of regulated vehicle suppliers beat their emissions targets in the first reporting period, resulting in a net surplus of 15.9 million NVES units.

Federal Infrastructure, Transport, Regional Development and Local Government Minister Catherine King said the results demonstrate that emissions reduction and market competition can coexist.

“Australians continue to have a choice across a wide variety of vehicles. These results make it clear the NVES supports both lower emissions and consumer affordability,” Ms King said.

The Government also stated that new vehicles became cheaper in real terms last year, after adjusting for inflation.

With formal reconciliation not due until 2028, most brands are expected to continue negotiating behind closed doors while accelerating hybrid and electric vehicle rollouts to manage their exposure.

As NVES thresholds tighten – particularly for diesel models from 2027 – today’s winners and losers could look very different in 12 to 24 months.

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