EVs Just Hit 20% of Australian Car Sales — What's Driving It?
EVs claimed a record 20% of Australian new car sales in May 2026. Here's what the surge means if you're considering a novated lease. Read more.
Australian EV sales just hit a record high. In May 2026, electric vehicles claimed 20 per cent of all new car sales — the highest monthly share on record, according to The Driven [Source 1]. The Tesla Model Y, BYD Sealion 7, Jaecoo J5 and Geely EX5 led the charge, while diesel ute sales fell sharply in the same period.
That's not a blip. It's a structural shift in what Australians are actually buying. And for PAYG employees thinking about a novated lease, the timing matters — because the list of EVs available at competitive price points is wider than it's ever been.
What this means for novated lease customers
The FBT exemption for eligible battery electric vehicles — legislated under the Treasury Laws Amendment (Electric Car Discount) Act — remains one of the most straightforward tax advantages available to Australian employees right now. When you salary package an eligible EV through a novated lease, the vehicle's running costs are paid from your pre-tax income, and no fringe benefits tax applies to the private use of the car.
The May sales data [Source 1] tells you something useful: more EVs are competing for your attention and your employer's approval. New entrants like the Jaecoo J5 and Geely EX5 are expanding the sub-$50,000 segment, which matters because a lower drive-away price generally means a lower lease payment and a larger slice of your savings comes from the tax treatment rather than the sticker price. More supply, more competition, more choice — that's generally good news for anyone in the market.
On the flip side, if you've been sitting on the fence waiting for the EV market to mature, this data suggests you're no longer waiting for 'someday'. The mainstream has arrived.
Common questions
Which EVs are FBT-exempt under a novated lease?
Eligible battery electric vehicles, hydrogen fuel cell vehicles and plug-in hybrids (PHEVs, for leases entered into before 1 April 2025) with a purchase price at or below the luxury car tax threshold for fuel-efficient vehicles are exempt. Check the ATO's current guidance for the threshold that applies in the income year your lease starts.
Does the record EV sales figure mean demand will outstrip supply?
Not necessarily. Multiple new Chinese brands entering the market in 2025–26 have meaningfully increased supply, particularly in the mid-range segment. Delivery times on popular models like the Model Y and BYD Sealion 7 have generally shortened compared to 2022–23.
Should I rush into a lease just because EVs are selling fast?
No. A novated lease is a multi-year financial commitment. The tax benefits are real, but they need to suit your income, your driving habits and your employer's appetite to administer the arrangement. Use a calculator and talk to a licensed adviser before signing anything.
Are diesel utes still a viable novated lease option?
Yes — diesel utes are still leaseable and may still make sense depending on your work use and lifestyle. They don't attract the FBT exemption available to EVs, so the tax treatment is different. The May sales trend reflects consumer preference shifting, not a regulatory change affecting utes.
Is the EV FBT exemption permanent?
The current exemption has no scheduled end date for battery electric vehicles, but tax policy can change. millarX monitors ATO and Treasury announcements and will update customers if the rules shift — it's one of the reasons working with an ACL-licensed, AFCA-registered broker matters.