Peak ICE Is Behind Us — What the EV Price War Means for Novated Lease Shoppers
ICE vehicles peaked in 2017 says the IEA, BYD is flooding export markets, and legacy carmakers are in a price war. Here's what it means for your novated lease.
The IEA's latest Global EV Outlook has put a date on something the industry has been debating for years: internal combustion engine (ICE) vehicle sales peaked globally in 2017. That claim, discussed in depth by The Driven podcast (Source 1), isn't just a headline — it has real consequences for anyone choosing a vehicle right now, especially on a novated lease where you're typically locked in for two to five years.
At the same time, BYD is building its own shipping fleet to control the cost and pace of its exports, and legacy manufacturers are being pulled into a price war that analysts suggest they're structurally ill-equipped to win. More supply, more competition, and downward pressure on EV prices — that's the environment you're shopping in.
What this means for novated lease customers
If you're sitting on the fence about whether to go EV or stick with petrol on your next novated lease, the market is shifting underneath you whether you act or not. Here's the plain-English read:
More choice at lower price points is likely coming. BYD's export push — and the legacy brands scrambling to respond — means the competitive EV segment is expanding. Vehicles that weren't viable novated lease options 18 months ago are increasingly within range for everyday PAYG employees.
The FBT exemption still applies to eligible EVs, which means novated leasing remains one of the most tax-effective ways to get into an EV in Australia. The exemption covers battery electric and plug-in hybrid vehicles below the luxury car tax threshold, as confirmed by the ATO. That structural tax advantage doesn't disappear because car prices are moving — if anything, falling purchase prices combined with FBT exemption eligibility could improve the overall value equation.
Residual value risk is real. A fast-moving market means EV values are harder to predict at lease end. Talk to your novated lease provider about how residual values are being set and what your obligations are if the market moves against you.
Common questions
Does the FBT exemption apply to BYD vehicles?
Some BYD models are eligible for the EV FBT exemption, but eligibility depends on the vehicle's drive-away price sitting below the luxury car tax threshold at the time of the lease. Check the specific model and price before assuming exemption applies.
Should I wait for prices to fall further before signing a novated lease?
Timing the car market is as unreliable as timing the share market. If you need a vehicle now, the combination of potential tax savings via novated leasing and current competitive pricing may already make sense. If you can genuinely wait, more supply could mean more options — but the FBT exemption has no guaranteed end date locked in beyond the current policy settings.
What is 'Peak ICE' and why does it matter?
Peak ICE refers to the point at which global sales of internal combustion engine vehicles hit their highest point and began declining. According to the IEA's Global EV Outlook cited by The Driven, that peak was 2017. For consumers, it signals that the shift to EVs is structural, not a trend — which affects resale values, fuel infrastructure, and long-term running costs.
Is a BYD a safe choice for a novated lease given the brand is relatively new in Australia?
BYD has grown quickly in the Australian market and several models are now available through mainstream novated lease providers. The key considerations are warranty terms, local service network, and residual value assumptions — your novated lease provider should be able to walk you through all three.
How does the EV price war affect my lease residual?
If EV prices fall significantly during your lease term, the residual value set at the start could end up higher than the car's actual market value. This is a known risk in a fast-moving market — ask your provider how residuals are calculated and whether there is any exposure at lease end.