Beijing Reimposes Battery Tax, Keeps Sodium-Ion Exempt Through 2028

The tax change

China has reimposed a 2% consumption tax on lithium-ion batteries, ending an 11-year exemption. The rate will rise to 4% in September 2027. Sodium-ion batteries and solid-state batteries remain exempt until the end of 2028.

The direct cost impact is modest. The 2% tax adds around CN¥438 (US$65) to the cost of a 60kWh pack, rising to CN¥876 at 4%. At least one battery maker, EVE Energy, reportedly plans to pass the cost on in full.

A broader withdrawal of support

The battery tax is one piece of a larger rollback. The NEV purchase tax, waived entirely between 2014 and 2025, has been charged at 5% since January, with relief capped at CN¥15,000 (US$2,235). It returns to the full 10% in January 2028.

Export rebates for electric vehicle batteries were cut from 9% to 6% in April and will end in January.

Demand is already softening

That decline comes even as NEVs reached 48% of Chinese new-vehicle sales in 2025, up from 5% in 2020.

Lithium markets have reacted sharply.

"There is a mounting sense of doubt that the consumption momentum can hold up to the end of the year sufficiently to absorb the strong cell production we have seen recently," said Adam Megginson, Principal Lithium Price Analyst at Benchmark Mineral Intelligence, in comments to Bloomberg.

Not all analysts read the sell-off the same way.

"There's no market fundamental behind it, and it should reverse in the short term because analysts continue to see a deficit in the coming years," said Ignacio Mehech, Chief Executive of CleanTech Lithium.

Sodium-ion is where support is heading

The continuing exemption for sodium-ion batteries signals where Beijing wants support directed next. China already dominates the segment, with more than 400 GWh of operating and planned capacity.

CATL is expanding aggressively. The company is adding 40GWh of sodium-ion capacity at its Fujian base, has signed a 60 GWh, three-year storage deal with HyperStrong, and began Chinese deliveries of its TENER Sodium system in September 2026.

"The changes are a competitive advantage for the top competitors," an executive at CATL told Nikkei.

That comment captures the policy's likely consequence. With purchase tax relief gone by 2028, smaller automakers and cell makers must absorb costs or raise prices in a falling domestic market, while the largest players have the scale to manage both — and the sodium-ion businesses to grow elsewhere.