ICE Vehicles Peaked in 2017. Here's Why That Matters for Your Next Car
The IEA says ICE vehicle sales peaked in 2017. BYD is flooding global markets and a price war is brewing. Read what this means for novated lease buyers.
According to the IEA's latest Global EV Outlook — discussed in a recent episode of The Driven podcast [Source 1] — internal combustion engine (ICE) vehicle sales globally peaked back in 2017. We're not approaching peak ICE. We've already passed it.
That's a big deal if you're about to sign a three-to-five year novated lease. The car you choose today will be competing against a resale market that's increasingly sceptical of petrol and diesel. Residual values on ICE vehicles are under pressure in a way they simply weren't five years ago.
What this means for novated lease customers
The Driven's analysis [Source 1] also highlights BYD's push to build its own export shipping fleet — a signal the brand is serious about volume and speed-to-market globally, including Australia. Meanwhile, legacy car makers are being pulled into a price war they're structurally ill-equipped to win: their cost bases were built for a different era.
For a PAYG employee weighing up a novated lease, this creates a genuinely useful window. More EV options at more competitive price points means the FBT exemption on eligible EVs — which already makes a meaningful difference to the after-tax cost — goes further when the drive-away price is falling. The flip side: locking into an ICE vehicle on a long lease term carries more residual-value risk than it did even two years ago. That's not hype — it's basic supply-and-demand logic playing out in the used-car market.
None of this means you must go electric. But it does mean the question is worth asking seriously before you default to petrol. A good novated lease broker should be running you a comparison across both — not steering you toward one to hit a quota.
Common questions
Does the FBT exemption still apply to BYD vehicles in Australia?
Eligible BYD models that sit below the luxury car tax threshold and meet the zero-emissions vehicle definition can qualify for the FBT exemption under current Australian legislation. Always confirm eligibility against the ATO's current guidance before signing.
If ICE sales are declining, will my petrol car's residual value drop?
Residual value projections are set at lease inception and depend on the funder's model — but broader market trends toward EVs do put downward pressure on used ICE values over time. It's worth discussing residual risk explicitly with your broker.
Is now a good time to novate an EV given falling prices?
Falling EV prices reduce your financed amount, which can improve the economics of a novated lease. Potential savings are qualitative and depend on your salary, tax bracket, employer, and the specific vehicle — use a calculator or speak to a broker for numbers relevant to your situation.
What is 'peak ICE' and why does it matter?
Peak ICE refers to the year global ICE vehicle sales hit their highest point — the IEA puts that at 2017. After that point, sales have been flat or declining as EV adoption grows, which has long-term implications for resale values and fuel infrastructure.
Do I have to choose an EV for a novated lease?
No — novated leases work on petrol, hybrid, and electric vehicles. The FBT exemption currently applies only to eligible zero-emission vehicles, which changes the cost comparison, but the right choice depends on your circumstances.