ICE Vehicles Peaked in 2017 — So Where Does That Leave Your Next Car?
The IEA says ICE vehicles peaked in 2017. BYD is flooding export markets and a legacy price war is on. Here's what that means for novated lease buyers in 2026.
According to the IEA's latest Global EV Outlook — covered in a recent episode of The Driven podcast ([Source 1]) — internal combustion engine vehicles hit their global sales peak back in 2017. That's not a prediction anymore. It's a rear-view mirror fact.
At the same time, BYD is building its own dedicated export fleet to push EVs into markets like Australia, and legacy carmakers are being dragged into a price war their cost structures may not be designed to survive. The result for Australian car buyers: more EV choice, at lower price points, arriving faster than most people expected.
What this means for novated lease customers
If you're an Australian PAYG employee weighing up your next novated lease, this structural shift matters in a few concrete ways.
First, vehicle choice is expanding rapidly. More BYD models — and competitive responses from legacy brands — means the pool of EVs eligible for the FBT exemption keeps growing. More competition at the entry and mid-range price points means you're less likely to be stuck choosing between a handful of expensive options just to access the tax benefit.
Second, the price war is working in your favour. Legacy manufacturers cutting prices to compete with BYD and other Chinese brands directly affects the drive-away cost that underpins your lease — and therefore the potential savings available through salary packaging. The FBT exemption on eligible EVs and PHEVs (as legislated under the Treasury Laws Amendment (Electric Car Discount) Act 2022) applies to the vehicle cost, so a lower sticker price can compound the tax benefit. We won't quote specific dollar figures here — our calculator on the millarX site does that in real time — but the directional logic is straightforward: cheaper eligible EVs mean the exemption stretches further.
Common questions
Does the FBT exemption apply to BYD vehicles in Australia?
It can, provided the BYD model is a zero-emissions battery electric vehicle (or qualifying PHEV), is under the luxury car tax threshold, and is provided through a valid novated lease arrangement. Model eligibility changes as new vehicles enter the market, so always confirm the specific variant with your leasing provider before signing anything.
If car prices fall because of a price war, does my existing novated lease change?
No. Your lease payments are locked in at the time of signing based on the agreed vehicle value. A market price drop after you start the lease doesn't automatically change your repayments, though it is worth factoring into residual value estimates when you set up the deal.
Is now a good time to lock in an EV novated lease given prices are moving?
That depends on your personal tax situation, how long you plan to keep the vehicle, and which models are available right now. The structural trend toward lower EV prices is real, but waiting indefinitely for a better deal is a classic trap — the FBT exemption has already had its PHEV eligibility cut back once. Use the millarX calculator to model your specific numbers, then decide.
What is 'Peak ICE' and why does it matter to me?
Peak ICE refers to the point at which global sales of internal combustion engine vehicles were at their highest — the IEA puts that at 2017, as discussed in the referenced Driven podcast episode. For a novated lease customer, the practical implication is that the industry's long-term investment is now flowing into EVs, which means more competitive models and pricing over time.
Do I have to choose an EV for a novated lease?
No. You can novate a petrol or diesel vehicle. You just won't access the FBT exemption that currently applies to eligible zero-emission and qualifying plug-in hybrid vehicles. The tax treatment of ICE vehicles under a novated lease is different — factor that into your comparison.