GWM details precise NVES compliance strategy

ACCRUE no penalties, accrue no credits – that is the philosophy driving Chinese car-maker GWM Australia’s approach to complying with federal New Vehicle Efficiency Standard (NVES) legislation that entered a critical phase on 1 July 2025.

“We want to run a business that sits right on the margins of not paying any NVES tax, but not banking any real credits,” GWM Australia chief operating officer John Kett told GoAuto in a wide-ranging interview.

“(GWM would) like to be at the cutting edge of adoption rates of consumers, not the leading edge of bringing (new powertrain) tech in, and having to discount and push it,” he said, referencing the glut some, but not all, car-makers have experienced in oversupplying electric vehicles to Australia in the past.

While NVES ‘monitoring’ has been taking place since New Year’s Day, financial consequences for beating or trailing the inaugural year’s relatively modest targets (141g CO2/km for passenger cars and SUVs, 210g CO2/km for utes and most 4WDs) will only apply for the second half of 2025.

NVES works by averaging the CO2 emissions of all new vehicles delivered by a carmaker in a given period and comparing that ‘fleet average’ to the relevant limit, which gets tighter each year from 2025-2029.

GWM supported the NVES legislation in its drafting stages.

Breaching the limit sees an OEM penalised $100 per gram over, multiplied by the total number of cars sold.

On the flipside, stay under the limit and it’s not a penalty but a $100 credit per gram, per car, with credits sellable to OEMs ending up in the red.

From 2026, NVES credit trading will be big business in Australia.

However, it’s a big business Mr Kett does not wish to observe in any substantial way in the books of GWM Australia. The industry veteran, and ex-Hyundai Motor Company Australia (HMCA) COO, sees accrual of credits or penalties as a mismatch between product mix and the tastes of Australian buyers.

To Mr Kett, NVES is a generational challenge for OEMs that have specialised in ICE powertrains but the chief, who spent nine years with FCA and PwC in China, believes GWM will thrive under the NVES environment due to its scale in building plug-in hybrids (PHEVs).

“The reality is (NVES) is a supply-side constraint on our business. (OEMs) have to bring in a mix of products that meet it because next year (and in 2027) you can’t afford to price (cars) for it, or it will make petrol cars significantly more expensive,” he added.

“The good news (for GWM) is that once everyone moves that way, which they have to if they want to be (in the Australian market), when (rivals) restack their pricing, our price relativity will be incredible.”

GWM is advanced in its product planning for 2026, widely perceived as the first hard year under NVES.

It has matched the share of engines within GWM model line-ups almost precisely to a goal of bare NVES compliance. Nothing more, nothing less.

Bullish targets of 20 per cent PHEV uptake across key model lines (including the Haval H6 midsize SUV pictured, Cannon Alpha large ute and Tank 500) have been selected to achieve precise compliance with 2026 NVES targets.

But if GWM’s PHEVs and full EVs overperform those estimates, which senior product specialist Timothy Leong conceded were “conservative”, Mr Kett will not be banking the resulting NVES credits or seeking to sell them to hapless CO2-churning rivals.

Instead, it will adjust powertrain mix on the run if GWM’s emissions trajectory appears to be undercutting NVES limits from 2026.

“If the mix shifted, we would do a lot more work around diesel Cannon (ute) and Tank (4WDs) and take advantage of that (to grow volume),” shared Mr Kett.

Projections for next year’s powertrain mix for the Haval H6 provide insight into GWM’s careful ‘bare NVES compliance’ posture.

Next year, Mr Kett expects to sell the H6 in a mix of 40 per cent non-hybrid (turbo petrol, 170g CO2/km), 40 per cent hybrid (HEV, 120g CO2/km), and 20 per cent from a new PHEV (22-25g CO2/km).

Analysing that mix results in an average CO2 emissions contribution of 120g CO2/km, which is within a couple of percentage points of next year’s relevant 118g CO2/km limit.

NVES does not assess individual models but rather an average of all deliveries from an OEM, so all model lines need to pull their weight.

Mr Leong revealed a PHEV option is crucially accounting for 20-30 per cent of GWM Cannon Alpha sales, with pure-ICE utes shaping up to be a major NVES headache for GWM’s rivals.

CO2-slashing PHEV power will soon be added as a flagship option for GWM’s top-tier Tank 500, a Toyota LandCruiser Prado rival.

GWM planners expect PHEV to form around 20 per cent of sales for not only the H6 (which competes in the RAV4 class) but also of the Tank 500. At the other end of GWM’s local low-emission line-up, a more affordable tier of Jolion small SUV has been added for $29,990 driveaway with a HEV powertrain.

While battery EVs (BEVs, which bank 0g CO2/km for NVES purposes) are a simple way for OEMs to rapidly drive down fleet-average emissions, GWM has struggled to make headway with its single-model Ora sub-brand so far.

While Ora has a broader portfolio overseas it has a single niche hatch model locally, accounting for just one per cent of GWM’s YTD 2025 sales. Next year, Ora will gain two SUV electrics, while Mr Kett revealed GWM will “trial” a BEV for one of its other sub-brands in Australia.

Either way, PHEV and BEV will account for a rapidly growing share of GWM’s business as the years tick by under NVES, leading to truly difficult 2029 limits of 58g CO2/km for cars and SUVs, and 110g CO2/km for utes and 4WDs.

However, while margin remains, GWM plans to keep developing internal combustion… for now.

“We will have a very broad range of PHEVs and HEVs,” added Mr Kett.

“We will be able to maintain ICE in the short term, but in the long term we see ourselves at the top of our business (PHEV/BEV).

“Think of Cannon and Tank (getting) another generation of diesel, bigger and better than what we have today. We are still investing in it, and in HEV.”