ICE Vehicles Peaked in 2017 — So Where Does That Leave Your Next Car?
The IEA says ICE vehicle sales peaked in 2017. BYD is flooding export markets. Legacy brands are cutting prices. Here's what the EV shift means for your novated lease.
The International Energy Agency's latest Global EV Outlook has landed, and the headline is blunter than most analysts expected: ICE vehicles hit their global sales peak back in 2017. That's not a forecast — it's a retrospective. According to analysis discussed in The Driven's May 2026 podcast [Source 1], we've already passed the inflection point, and the direction of travel is one-way.
At the same time, BYD is building out its own export shipping fleet to get vehicles to market faster and cheaper, and legacy automakers are being dragged into a price war their cost structures weren't designed to survive. For Australian car buyers, that combination — structural EV demand growth plus intensifying price competition — matters more than most people realise.
What this means for novated lease customers
If you're an Australian PAYG employee weighing up a novated lease right now, the timing is genuinely interesting — and not just because of the EV FBT exemption that's already on the books.
First, increased supply competition tends to put downward pressure on EV sticker prices. More BYD models entering the Australian market, combined with legacy brands discounting to hold share, means the pool of FBT-exempt vehicles eligible for a novated lease is expanding — and those vehicles are increasingly price-competitive against petrol equivalents. You're not just paying less in tax; you may also be choosing from a wider, more affordable lineup than existed two years ago.
Second, the data from the IEA reinforces that EVs aren't a niche play anymore [Source 1]. Resale risk — one of the legitimate concerns about leasing an EV — looks different when the broader market is structurally moving in the same direction. That doesn't eliminate residual value risk, but it's context worth having when you're deciding between an EV and an ICE vehicle on a three-to-five year lease term.
None of this is financial advice, and the right answer still depends on your salary, your employer's agreement, your driving habits, and the specific vehicle. But the macro tailwind is real.
Common questions
Does the FBT exemption still apply to EVs in 2026?
The Federal Government's FBT exemption for eligible battery electric and plug-in hybrid vehicles under the luxury car tax threshold remains in place. Check the ATO's current guidance and confirm with your employer's novated lease administrator, as policy details can change.
Should I wait for prices to drop further before taking out a novated lease?
Market timing is difficult. While more competition from brands like BYD may put downward pressure on prices, you forgo potential tax savings every month you wait. A proper salary packaging calculation based on your current situation is more useful than speculating on future price moves.
Is BYD eligible for a novated lease in Australia?
Yes — eligible BYD electric vehicle models available through an Australian dealer can generally be financed via a novated lease, provided they meet FBT exemption criteria. Model eligibility should be confirmed at the time of quoting.
What happens to my residual value if EV prices keep falling?
Residual value risk is real with any leased vehicle. Your novated lease will set a residual based on ATO guidelines at the time of signing. Broader EV adoption, as signalled by the IEA data, may actually support long-term resale values — but there are no guarantees, and it's worth discussing with your broker.
Does 'peak ICE' mean I shouldn't lease a petrol car?
Not necessarily — ICE vehicles still represent the majority of new car sales and remain fully eligible for novated leasing. The FBT calculation is different, and you won't access the EV-specific exemption, but a novated lease on a petrol vehicle still offers meaningful pre-tax benefits for many employees.