EV and hybrid sales see Kia bank NVES credit

KIA Australia (KAu) says that it is in a credit position under the Commonwealth Government’s New Vehicle Efficiency Standard (NVES) laws, with senior executives telling GoAuto that the brand is deliberately banking credits ahead of what it expects to be more difficult years ahead for NVES compliance.

A strategy to keep accruing NVES credits into next year will see Kia aim to keep relatively strong sales of its mid-market EV3 and EV5 battery electric (BEV) crossovers on the boil while gradually shifting a higher proportion of Sportage and Sorento SUVs to lower-CO2 petrol-electric hybrid (HEV) powertrains.

An additional plank to KAu’s broad NVES response is expected to be next year’s launch of the second-generation Seltos small SUV—widely tipped to include a HEV engine—while the diesel-only Tasman ute will be updated with a 48-volt mild-hybrid system in late 2026 or early 2027, cutting its CO2 profile.

While fleet-average CO2 performance has been measured across new vehicle sales for all carmakers in Australia since 1 January 2025, financial credits and penalties only began to accrue on 1 July 2025, with this year’s relatively achievable g/km CO2 targets tightening by about 15 per cent next year.

KAu chief operating officer Dennis Piccoli told GoAuto that the most recent NVES performance report he had seen suggested Kia would be in credit for 2025—meaning that its fleet-average CO2 across all new vehicles sold by the brand this year was below the limit.

When a brand is in credit for a given year, it can either bank those credits to offset against NVES penalties in future years, or it can sell them to other carmakers that are seeking to artificially reduce their own fleet-average CO2.

“It is not our plan to be selling credits … longer-term, our (NVES) strategy has always been to create a credit scenario that will take us beyond 2026 and into 2027-2028,” said Mr Piccoli.

GoAuto understands that Kia executives have reasonably high confidence that an NVES credit position will also be achieved in 2026 (in which the headline emissions targets are 117g/km for cars and SUVs and 180g/km for utes) before a harder tightening to 92g/km and 150g/km respectively in 2027.

Before that point, carmakers will be able to petition the government to make changes to the NVES legislation as part of a statutory review process set to take place in late 2026. Some OEMs are expected to support the existing NVES timeline while others are tipped to beg a reprieve.

KAu’s rosy NVES position has been underwritten by 4541 deliveries of the EV5 midsize SUV—which has found a larger-than-expected fleet sales audience—and 2416 EV3s. Kia has also lowered entry prices for HEV versions for its combustion SUVs and will continue to expand HEV offerings with the support of the factory.

“In having NVES, (we have) the ability to order more hybrids. Sometimes hybrid powertrain supply is pushed to regions that have CO2 regulation, and that has freed up a little more for Australia because (Kia global) is now mindful of our CO2 regulation,” explained KAu general manager of product planning Roland Rivero.

While sales of the Tasman ute (which emits up to 215g/km) have been slower than expected, this may have been an NVES ‘blessing in disguise’ as it has relieved pressure on KAu’s CO2 balance sheet. The discontinuation of the thirsty (but well-liked) Stinger 24 months ago means Kia’s line-up is fairly ‘clean’.

But an on-again, off-again plan to add the even smaller, European-built EV2 BEV hatchback to Kia Australia showrooms looks to be once again on the rocks due to persistently unattractive exchange rates for the Australian dollar against the Euro. The EV2 will be revealed in January 2026.

“Slovakia-sourced product is something we are closely looking at the business case for. (The) cost of production out of Slovakia, and the freight of getting it all the way to Australia, is still higher than if we were to source from Korea,” said Mr  Rivero.

“The currency is not great. The Euro to the Aussie dollar is not something you can easily just turn around, so I think the math at the moment (for EV2) is questionable,” he added.