MANY MINDEDChina Puts a Tax on Lithium Batteries — and Spares the Chemistries Meant to Replace Them
China's finance ministry, customs administration and tax authority announced Friday that lithium-ion batteries will carry a 2% consumption tax starting September 1, 2026, rising to 4% a year later. The tax also covers lithium primary, mercury-free primary, nickel-metal hydride, and vanadium redox flow batteries. It ends an 11-year exemption that dated to the 4% battery tax first levied in February 2015, which had spared lithium-ion cells.
The exemptions are the real signal. Sodium-ion batteries, solid-state batteries, and fuel cells stay tax-free from September 2026 through the end of 2028. Perovskite, tandem, and gallium arsenide photovoltaic cells are also exempt through 2028, while conventional PV cells face their own 2% tax from April 2027, rising to 4% the following year. The scale is large: China's power battery installations hit 335.6 GWh in the first half of 2026, up 12% year on year per CABIA, and NEVs made up 54% of passenger car sales in that period per CPCA.
By taxing the incumbent and sparing the challengers, the policy nudges investment toward chemistries pitched as cheaper or safer — sodium-ion using abundant materials, solid-state promising higher energy density. Cheaper, more diverse storage is the backbone of affordable clean power, so steering the world's largest battery market this way could ripple into grid and vehicle costs.
What to watch: whether the tax meaningfully raises EV prices — the cost impact is described as a possibility, not a measured outcome — and whether solid-state cells reach the small-batch vehicle deployment CATL and BYD plan around 2027.
Source: CnEVPost