Transport Minister Catherine King and Energy Minister Chris Bowen revealed the government's final plans for new vehicle rules on Tuesday, alongside representatives from automakers including Toyota, Tesla, and Hyundai.
The fuel-efficiency laws, to be presented to parliament on Wednesday, will also pause penalties for exceeding emission targets for its first six months of its operation under the changes.
But industry groups and auto brands largely welcomed the introduction of the standard, which they said was necessary to significantly lower Australia's transport pollution.
Catherine King says more than 9000 submissions were received during consultation. (Mick Tsikas/AAP PHOTOS)
Ms King said the government had settled on a final design for the standard after receiving more than 9000 submissions during its latest public consultation and negotiating with vehicle brands.
"In order to make sure we had the right model for Australia, we've had to engage directly with manufacturers," she said.
"We want to get fuel savings for consumers, we want to absolutely make sure we get choice in vehicles for the Australian market, and we also want to make sure we get emissions down at the same time as making sure that Australians can still continue to buy the cars that they love and use."
The revised policy will still seek to reduce emissions from passenger cars by 61 per cent in 2029, but has relaxed proposed emission cuts for light commercial vehicles, such as utes, by 35 per cent.
It will also move some large four-wheel drive vehicles, such as the Toyota LandCruiser, Ford Everest and Isuzu MU-X, into the commercial category, giving them lower emission reduction targets.
Penalties and credits under the standard will also not apply until July 2025, six months after the law comes into effect.
Chris Bowen says compromises were struck with the car industry. (Mick Tsikas/AAP PHOTOS)
Energy Minister Chris Bowen said the government negotiated with vehicle brands and environmental groups to reach an acceptable compromise.
"Not everybody here has got everything they asked for," he said.
"Some people wanted us to go harder and faster, some had concerns and wanted us to slow, but everybody here today has had a say, everybody today has had genuine concerns taken on board, and everyone today recognises that Australia can now move on."
The relaxed rules come just days after America's Environmental Protection Agency announced new vehicle regulations with additional credits and a later target of 2032.
Tesla Australia senior energy policy advisor Sam McLean said the policy presented a solid compromise between traditional car brands, electric vehicle makers, environmental concerns and consumer demand.
"This is a very moderate standard that takes Australia from being really in last place in this transition to the middle of the pack," he said.
"In doing so, it will save motorists thousands of dollars on petrol."
Vehicle manufacturers say they will have to make changes to their future ranges under the changes. (Steven Saphore/AAP PHOTOS)
Toyota Australia president Matthew Callachor welcomed the policy but said the manufacturer would still have to make big changes to its future range.
"There still remains a significant challenge as we look ahead," he said.
"We cannot afford to be mispriced otherwise you're basically not going very well at all."
Electric Vehicle Council chief executive Behyad Jafari said the government had shown "mettle" to introduce the standards after other attempts had failed, and hoped the rules for new cars would see motorists given more efficient vehicle options.
"Thanks to these standards Australia will no longer be considered the global dumping ground for the world's most inefficient vehicles," he said.
