The nation’s peak car makers’ association says the effective cost of switching to electric and lower-emission vehicles could be as high as $38 billion over the first five years of Labor’s planned fuel efficiency standard.

While the government and climate groups emphasise the large fuel cost savings they say the new standard would trigger via increased supply of EVs, car dealers argue the policy does not take account of the direct burden on consumers from its rapid introduction.

Labor’s policy would from January 1 impose an annual standard, or threshold, of average emissions for all cars sold by manufacturers.

Models that are above the standard – which the government wants to initially set at 141 grams of CO₂/km for light cars and 199 grams of CO₂/km for utes and four-wheel drives – would need to be “offset” by greater sales of low- or zero-emission vehicles, or payment of a penalty. The standard would be reduced every year thereafter.

In an indication of the impact from one side of the policy’s cost-benefit ledger, the Federal Chamber of Automotive Industries (FCAI) analysed the emissions released by all 1.2 million cars sold last year, according to its database, and calculated the “penalty” that would apply if the same sales patterns were repeated in 2025.

The analysis assumes no behavioural change among consumers and car makers under Labor’s emissions standard change, with the cost of complying with the regulations in 2025 starting at $2.21 billion.

That figure would rise to $4.99 billion in 2026 and $12.1 billion by 2029.

The total through to the end of the decade would be $38.1 billion, according to the FCAI.

Those estimates do not take account of potential “credits” that some car makers would generate for selling a fleet of models that averages below the standard.

“These numbers illustrate the magnitude of the change, and if consumers don’t change their behaviour what it will cost the entire car-buying public in the first five years,” Tony Weber, chief executive of the FCAI, told The Australian Financial Review.

While the FCAI supports a fuel efficiency standard in Australia, Mr Weber warned the government’s planned version was too aggressive and would force carmakers to withdraw popular models from the market prematurely.

“It’s no surprise that the car lobby would prefer no regulation,” said Climate Change and Energy Minister Chris Bowen. “In 2025, the government’s preferred standard is less stringent than the voluntary standard the FCAI purports to support.

“Their modelling assumes car companies will do nothing to comply with the same standards with which they already comply all around the world.”

Labor faced a series of opposition questions in parliament on Thursday challenging the government’s claims that the cost of SUVs, utes and bigger cars would not go up.

Ministers responded by quoting former Liberal transport minster Paul Fletcher’s advocacy of a similar scheme during the Turnbull and Morrison governments, and emphasising increased choice for consumers as a result of the changes.

Prime Minister Anthony Albanese said Mr Fletcher’s position in 2017 was that introducing an Australian fuel efficiency standard in line with most other nations would save passenger vehicle owners $500 a year, or nearly $28 billion by 2040.

The FCAI calculated that Labor’s scheme – assuming a repeat of last year’s sales mix – would generate total credits over the first five years of $3.54 billion. That implies a net cost to buyers of $34.6 billion, it said.

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