Australia’s love-hate relationship with fuel-guzzling utes and SUVs is now a looming election issue, after the Coalition indicated it may rethink Labor’s vehicle emission standard.

On Tuesday the shadow transport minister, Bridget McKenzie, called Labor’s vehicle emission standard “poorly designed” and said the Coalition will have “more to say” about it when the opposition releases its own transport policy before the election.

Labor’s new vehicle efficiency standard (NVES), which became law on 1 January, enforces an emissions maximum for each car manufacturer, with a penalty of $100 for every gram of emissions over the target.

The standard was designed to encourage carmakers to release more green vehicles on to Australia’s market, with more competition to drive down the price for consumers. And the Electric Vehicle Council (EVC) says the standard is already working.

More than 120 electric vehicles are now available in Australia as the new laws upend the nation’s status as a “dumping ground” for big, polluting cars. Prior to January Australia was the only OECD country without a vehicle emission standard.

The obsession with big cars is not only fuelling the climate crisis, it is making roads deadlier and adding to traffic congestion. And there are other costs – Australians spend on average almost $100 a week on fuel.

But the Coalition is set to make the standard an election issue.

On Tuesday McKenzie said the Coalition opposed the NVES when it was introduced “because it will punish Australian families and tradies simply because of the cars they love and need to drive”.

She claimed the NVES was “poorly designed, pulls the wrong lever in a cost-of-living crisis and discriminates unfairly against everyday Australians”, and criticised the government for keeping the modelling on which it was based a secret.

“We will have more to say on the NVES when the Coalition’s low-emissions transport policy is released before the election,” she said.

McKenzie, the opposition leader, Peter Dutton, and the Nationals leader, David Littleproud, have referred to the NVES as a “tax”, but the government described it as a “regulatory obligation to incentivise the supply of a greater number of fuel-efficient, low- and zero-emission vehicles to Australia”.

The Electric Vehicle Council says the standard is already having an effect on which cars international manufacturers choose to send to Australia.

The EVC’s head of legal policy and advocacy, Aman Gaur, said the NVES is “definitely working”, even though the next part of the standard – the penalty and credit system – does not start rolling out until 1 July. (If carmakers beat the emission target they receive credits, which they can use to offset the emissions on other, dirtier cars, or trade with other manufacturers.)

The council’s statistics show electric vehicle sales – including hybrids – made up 11.3% of total car sales in February this year, compared with 9.3% last year.

“As the standards operate, they encourage manufacturers to bring in more efficient petrol cars, but also electric cars,” Gaur said.

He said there are now cheaper EVs available in more categories – including utes – and they can save people about $3,000 a year on fuel and maintenance.

Prior to the NVES, Gaur said, Australia had “the worst standards, right next to Russia” but now companies are flocking to sell EVs here.

At the Everything Electric show in Sydney earlier this month, Gaur said, there were 36 brands on offer, while “three years ago, there were three”.

The Coalition opposed the bill even after the government watered it down, reducing the targets and carving out popular SUVs, including the Toyota LandCruiser and the Nissan Patrol.

Australian cars are, according to the government’s analysis in the lead-up to the creation of the standard, inefficient compared with other countries and responsible for megatonnes of greenhouse gas emissions, making up 11.4% of Australia’s total emissions.

That analysis found “manufacturers supply cars to the Australian market that aren’t as fuel efficient as the cars they supply to other markets”. It found manufacturers do not offer the same range of electric vehicles, including plug-in hybrid electric (PHEVs), hybrid electric (HEVs) and electric, because of the lack of a mandatory standard.

A 2024 study from the University of Technology Sydney found Australian passenger vehicles are emitting 50% more carbon dioxide than the average in major markets, including US, China, EU and Japan, because those markets were “aggressively” adopting standards to prompt a transition to lower emissions.

The Federal Chamber of Automotive Industries says, contrary to the EVC’s position, that the standard is not working. According to its latest data, “pure” electric vehicle sales (excluding hybrids) were just 5.9% in February, down from 9.6% last year, while the preference for bigger cars continued.

The FCAI chief executive, Tony Weber, said while it is true there are more EVs available now, “consumers just aren’t buying them” and “without a high penetration of EVs, we’re just not going to meet the lofty ambitions of the government”.

“Penalties will be paid … or people will keep their existing cars longer and we’ll have an older, dirtier and unsafer fleet.”

He said the government did not release its modelling on supply and demand, and called for it to sit down with industry to “work out a pathway forward”.

Guardian Australia has asked the government for a response.

Weber also said the idea of Australia as a “dumping ground” was “completely irrational” because it is a relatively small market.

The Climate Council fellow John Stone, a recently retired University of Melbourne transport planner, painted a bigger picture.

“If we’re going to get to our climate targets and our health and wellbeing targets, we have to be using cars less,” he said.

Stone said that means giving people a way to leave their cars at home, including investing in pathways and bike paths to encourage other forms of transportation.

“Build it and they’ll come,” he said.