The new vehicle emissions standards would not be entirely scrapped, but potential fines for manufacturers would go, in a shift Prime Minister Anthony Albanese said would remove the incentive to comply.
Deputy Opposition Leader David Littleproud told AAP on Friday manufacturers would pass on penalties to consumers.
"We believe in reducing emissions, but in a cost-of-living crisis, what government would push up the purchase price of a new vehicle?"
"I don't think these manufacturers are that generous that they're going to be sitting they're saying, 'oh we'll take one for Australia," he said.
Opposition Leader Peter Dutton described the penalties as a tax and promised to scrap them.
"We want cleaner, cheaper cars on Australian roads as we head towards net zero by 2050, but forcing unfair penalties on car makers and consumers is not the answer," he said in a statement.
Opposition Transport spokeswoman Bridget McKenzie said popular petrol and diesel cars and utes would get more expensive, prompting drivers to keep older, less efficient vehicles.
The Opposition also plans to halve the petrol excise for 12 months and says it will save motorists 25 cents per litre on fuel.
AAP FactCheck recently analysed claims the standards, which took effect in January, would drive up costs, finding false claims had been made based on outdated figures.Â
Penalties would not necessarily drive up purchase prices, as the fines were based on a manufacturer's total fleet sales.
A number of so-called teal independents, such as Warringah MP Zali Steggall, helped drive the new emissions standards after dethroning Liberals in blue-ribbon seats.
She said the policy brings safer, more fuel efficient cars into the country and criticised the move.
"It's like (Opposition Leader) Peter Dutton and the coalition opened their policy drawer, they find it empty and they dust off an old bad policy and try and sell it."
The standards need to have consequences in order to encourage compliance.
"Australian people were not given the choice by car manufacturers because they dumped the dirtiest and the least fuel efficient cars in Australia," Ms Steggall said on Sky News.
Mr Albanese said the coalition plan was another change in policy.
"(Mr Dutton) said he'd get rid of it, now he's said that he'll change something that is essentially the incentive for the policy to be implemented," he told reporters.
The "so-called fines" were not expected to produce revenue.
"Because we expect that the companies, that way that it's been designed ... in partnership ... we expect them to comply," he said.
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