China will tax lithium and solar batteries for the first time in a decade, but sodium batteries stay exempt

TL;DR

China ends a decade-long tax exemption on lithium and solar batteries to curb overcapacity. Sodium-ion and solid-state batteries remain exempt through 2028.

China will impose a consumption tax on lithium-ion and solar batteries for the first time in a decade, marking a policy shift as Beijing seeks to rein in overcapacity and destructive price wars in industries it spent years subsidising into global dominance. A 2% tax on lithium-ion batteries takes effect this September, rising to 4% from September 2027. Solar cells face the same trajectory starting April 2027, reaching 4% in April 2028.

Beijing exempted both technologies from the consumption tax in 2015 to accelerate the clean energy transition. The strategy worked: Chinese manufacturers now dominate global markets for EV batteries and solar panels. But years of relentless capacity expansion have triggered severe overcapacity and cut-throat competition at home. Authorities summoned leading battery makers earlier this year to...

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