The popularity of public transport especially rail-based transit in urban areas replacing the role of motorised transport has been widely discussed. Among rail transit options, the modern tram is considered as one of the most efficient modes of transport with significant effects on establishing a sustainable urban transport system with a decrease automobile dependency and carbon emissions. This article justifies the potential contributions of the new tram line to the East End of Adelaide’s Central Business District (CBD) in South Australia to reduce the use of private vehicles by shifting current car users to the new tram services, with an associated reduction of carbon dioxide as a result of the modal shift. Firstly, a projection of the modal shift of current car users to the new tram transit service was estimated using statistical analysis with data collected from the implementation of an intercept survey with different groups of participants on the proposed tram route (North Terrace, Adelaide). More importantly, the calculation of carbon dioxide reduction based on the likely modal shift was also revealed to demonstrate the positive environmental implications of the tram line extension. Based on these research outcomes, this paper provides reliable justifications to support the priority of having investments in public transport system to mitigate car dominance in Adelaide that has been mentioned in the future transport policy of the State. The paper also makes a significant contribution to formulate the foundation of future studies with regard to the developments of other tram transits in Metropolitan Adelaide.