Australia’s government has bowed to political pressure and growing public backlash to water down planned vehicle emission standards, handing a potential win to Ford Motor Co and Toyota Motor Corp at the expense of electric car maker Tesla Inc.

The new fuel efficiency standards will still come into effect on Jan 1, 2025, as originally intended, but following consultation with the auto industry, the start date for automakers accruing debits and credits has been pushed back until July 1 that year.

In addition, the government said on Tuesday it will adjust emissions limits for heavier cars, such as the top-selling Ford Ranger and Toyota Hi-Lux utility vehicles. Some popular four-wheel drives will also be moved into the light commercial vehicle category from the passenger vehicle category, such as the Toyota Landcruiser and Nissan Patrol, allowing them to pump out more emissions.

At a press conference in Canberra flanked by representatives from Toyota, Tesla and Hyundai Motor Co, Industry Minister Catherine King said the government had responded to “practical suggestions” in its consultation on the policy, and settled on an “Australian standard for Australian consumers and Australian conditions.”   

Speaking alongside King, Toyota Australia chief executive officer Matthew Callachor said the new standards would present a “significant challenge” but the the automaker wanted to see ambitious reforms. Tesla senior manager of business and policy development Sam McLean said no automaker had got everything they wanted, but the new policy was a “very solid compromise.”

“This is a very moderate standard that takes Australia from being really the last place in this transition to the middle of the pack,” McLean said. 

Apart from Australia, Russia is the only other developed economy without fuel emissions standards. That has limited the range of electric cars available in Australia as carmakers direct EVs to countries where they have to meet tougher emissions rules.    

The centre-left Labor government promised to implement fuel efficiency standards at the 2022 federal election, as part of a number of measures to crack down on Australia’s carbon emissions. Countries including the US have had fuel efficiency policies in place for decades.

The government announced its preferred option in February, which it said would cut CO2 emissions by 369 million tonnes by 2050. However following the announcement, the government saw pushback from parts of the automotive industry and opposition lawmakers.

Elon Musk’s electric carmaker earlier this month quit Australia’s Federal Chamber of Automotive Industries (FCAI) - the sector’s peak body - which had lobbied against the tougher emissions standards. Tesla accused the group of making “demonstrably false” comments about the policy’s impact on prices. Luxury electric-car brand Polestar followed Tesla in exiting the group, claiming the FCAI was waging a deliberate campaign to obstruct Australia’s path to emissions reduction.

Sport utility vehicles and light commercial vehicles accounted for almost 80% of new vehicle sales last year. While Tesla is making inroads into the Australian auto market - selling 46,116 vehicles last year - that’s just a fraction of the combined 303,000 vehicles Toyota and Ford delivered. 

  - Bloomberg