On September 1, 2026, a new tax policy affecting the entire new energy industry chain will take effect—the consumption tax on lithium batteries will officially be reinstated. According to Announcement No. 20 of 2026 issued by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, effective September 1, a consumption tax at a rate of 2% will be levied on primary lithium batteries and lithium-ion rechargeable batteries; effective September 1, 2027, the tax rate will be raised to 4%. This marks the official end of the lithium battery industry’s 11-year tax-exemption period. EVE Energy took the lead in issuing a price adjustment notice at the end of July, announcing that starting September 1, a 2% consumption tax will be levied on domestic sales products based on the original tax-excluded supply price. For export products, the tax will be levied at the ex-factory stage and refunded upon application under the ”collect-first, refund-later” procedure after customs clearance.

This is not an isolated case for a single company. According to calculations by CITIC Securities, for an electric vehicle equipped with a 60-kWh battery, the 2% tax rate would increase the cost per vehicle by approximately 468 yuan, while the 4% tax rate would increase it by approximately 936 yuan. Meanwhile, a research report by Shenwan Hongyuan indicates that, based on the current price of lithium batteries at 0.35–0.4 yuan/Wh, the 2% consumption tax corresponds to a cost increase of approximately 0.007–0.008 yuan/Wh. As a tax incorporated into the price, the consumption tax is paid by battery manufacturers during the production process, but the cost will ultimately be passed down through the supply chain to downstream end users such as vehicle manufacturers and energy storage system providers. Faced with this change, battery manufacturers, new energy vehicle manufacturers, and downstream distributors alike must complete adjustments to their invoicing systems, restructure cost accounting, and renegotiate supply chain contracts during this final window period in August.

With only 30 days left until the new consumption tax policy takes effect, businesses need to complete tax system upgrades, adjust invoicing categories, negotiate cost pass-through, and streamline export tax rebate procedures before the policy is implemented. Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), the Cayman Islands, and other locations, as well as corporate annual review and auditing, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI and FDI filings, as well as Hong Kong residency applications, renewals, and permanent residency services; Singapore Employment Pass (EP) application services; and cross-border e-commerce mentoring and agency operations. If you have any needs or are interested, please feel free to contact me at any time (Consultation Hotline: 18676749275, add WeChat: Qicaiyingjituan).

I. Policy Overview: The 11-Year Exemption Period for the Consumption Tax on Lithium-Ion Batteries Comes to an End

To understand the impact of this new consumption tax policy, we must first clarify the policy context. In January 2015, the Ministry of Finance and the State Administration of Taxation issued the “Notice on the Levy of Consumption Tax on Batteries and Coatings,” which imposed a consumption tax on batteries effective February 1, 2015, at a rate of 4%. However, to support the development of emerging industries at that time, seven major categories—mercury-free primary cells, nickel-metal hydride rechargeable batteries, lithium primary cells, lithium-ion rechargeable batteries, solar cells, fuel cells, and vanadium redox flow batteries—were granted an exemption from the tax.

Eleven years later, the tax-exemption policy has officially been phased out. Announcement No. 20 of 2026 specifies that, effective September 1, a consumption tax rate of 2% will apply to mercury-free primary cells, nickel-metal hydride batteries, lithium primary cells, lithium-ion batteries, and vanadium redox flow batteries; Effective September 1, 2027, the tax rate for the aforementioned products will be increased to 4%. Meanwhile, photovoltaic cells will be subject to a tax rate of 2% effective April 1, 2027, and 4% effective April 1, 2028.

Differentiated tax-exemption arrangements leave room for new technologies. Sodium-ion batteries, solid-state batteries, fuel cells, and photovoltaic cells—including perovskite cells, tandem cells, and gallium arsenide cells—will be exempt from consumption tax from September 1, 2026, through December 31, 2028. This arrangement creates a significant ”tax disparity”—with lithium-ion batteries subject to tax and sodium-ion batteries exempt—thereby reserving a golden policy window of more than two years for the industrialization of next-generation battery technologies.

II. Cost Pass-Through Chain: From Battery Manufacturers to End Consumers

The consumption tax is an inclusive tax that is incorporated into the price. Although it is paid by battery manufacturers at the production stage, the cost will ultimately be passed down through the supply chain at each level.

First Link: Battery Companies. The consumption tax is levied at the point when lithium-ion battery cells leave the factory. Leading companies such as CATL and BYD, leveraging economies of scale and strong bargaining power, can pass on part of the tax burden to downstream players; second- and third-tier companies, however, have limited room for negotiation, and their profits will come under direct pressure. Mo Ke, founder of Zhenli Research, believes the policy will accelerate the industry’s process of survival of the fittest, and the phase-out of inefficient production capacity is expected to speed up.

Phase 2: Vehicle Manufacturers and System Integrators. According to calculations by CITIC Securities, for an electric vehicle equipped with a 60-kWh battery, the cost per vehicle would increase by approximately 468 yuan under the 2% tax rate and by approximately 936 yuan under the 4% tax rate. Currently, the automotive industry’s overall profit margins remain under sustained pressure, with rumors circulating that ”for a new car priced at 100,000 yuan, automakers can only earn 1,500 yuan.” The cost increases resulting from the battery consumption tax will further intensify competitive pressure in the new energy vehicle market.

Third Segment: End Consumers. In the short term, battery manufacturers and automakers typically supply products at prices set in long-term agreements, which are not adjusted immediately in response to market conditions. However, during subsequent price negotiations, the tax burden will gradually be passed on and may ultimately be partially passed on to consumers. That said, since the increase in costs accounts for less than 1% of the total vehicle price, the impact on end consumers will not be particularly noticeable.

Fourth Link: Export Enterprises. Excise tax on exported products is levied at the applicable rate at the time of shipment, and the prices for export and domestic sales are kept uniform. However, after completing export customs clearance, enterprises may apply for a tax refund in accordance with the national ”pay first, refund later” policy. This means that exporting enterprises must manage an additional ”pay first, refund later” cash outlay, placing higher demands on cash flow management.

In light of the cost restructuring and compliance requirements brought about by the new consumption tax policy, companies need to complete tax system upgrades, adjustments to invoicing items, cost accounting restructuring, and the establishment of export tax refund processes during the August window period. Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the British Virgin Islands (BVI), and the Cayman Islands, as well as services such as annual company audits, bookkeeping and tax filing, tax compliance, information updates, bank account openings, ODI filings, FDI filings, and other corporate services; Hong Kong residency applications, renewals, and permanent residency services; Singapore EP application services; and cross-border e-commerce coaching and managed operations—all as part of our one-stop service. If you have any needs or are interested, please feel free to contact me at any time (Consultation Hotline: 18676749275, add WeChat: Qicaiyingjituan).

III. Four Preparations Companies Must Complete by August

With less than a month to go until September 1, companies need to move forward with their preparations simultaneously across the following four areas.

First, adjustments to the tax system and invoicing. Companies must complete the identification of consumption tax categories, the determination of tax rates, and the upgrade of their invoicing systems through the Electronic Tax Bureau. Specifically, this includes: adding new consumption tax items (such as primary lithium batteries and lithium-ion batteries) to the tax control system and setting the 2% tax rate; adjusting the tax-inclusive pricing system to incorporate consumption tax into the ex-factory price; For framework orders that have been signed but not yet delivered, assess whether it is necessary to renegotiate pricing terms with customers. EVE Energy’s price adjustment notice has explicitly stated that ”framework orders that have been signed but not yet delivered are also subject to this price adjustment,” meaning that companies cannot refuse to pass on the tax burden on the grounds of ”old contracts.”

Second, restructuring cost accounting and pricing strategies. As a tax-inclusive tax, the consumption tax directly affects the calculation of gross profit margins. Companies need to recalculate the tax-inclusive costs, gross profit margins, and minimum pricing thresholds for each product line. For domestically sold products, a 2% consumption tax must be added to the original tax-exclusive supply price; for exported products, companies must establish a ”collect-first, refund-later” ledger to track tied-up funds and calculate the impact of the tax refund cycle on cash flow. It is recommended that companies prepare monthly projections of consumption tax liabilities to plan their cash flow arrangements in advance.

Third, establishing the export tax rebate process. Exporting companies must update their export tax refund filing information by September 1 to ensure the smooth operation of the ”collect-then-refund” process for consumption tax. Specifically, this includes: verifying the correspondence between commodity codes on export customs declaration documents and excise tax categories; establishing a separate accounting system for domestic sales and exports; and organizing the complete chain of supporting documents required for tax refund applications (export customs declaration forms, excise tax payment receipts, sales contracts, and foreign exchange receipt vouchers). If a company engages in both domestic sales and export operations, it must strictly maintain separate accounting systems; failure to do so may affect the approval of tax rebates.

Fourth, renegotiation of supply chain contract terms. The pass-through of consumption tax costs requires support from contract terms. Companies should review their existing orders to assess whether the contracts include ”clauses regarding changes in taxes and fees” or ”price adjustment mechanisms.” For contracts that do not include such clauses, companies should negotiate with customers as soon as possible to sign a supplemental agreement that clearly specifies who will bear the consumption tax costs and how they will be passed on. At the same time, newly signed contracts should include a standard clause stating, ”In the event of tax policy adjustments, both parties shall negotiate price adjustments,” to avoid being caught off guard by future policy changes.

IV. Tax-Exempt Channels for Sodium-Ion Batteries: New Opportunities for Industrial Development

The new consumption tax policy not only creates cost pressures but also presents opportunities for industry restructuring. Sodium-ion batteries will be fully exempt from consumption tax from September 2026 through December 2028, creating a stable tax burden gap of up to 4% compared to lithium-ion batteries.

According to estimates by industry organizations, this tax exemption policy could provide sodium-ion batteries with an additional cost optimization range of 3% to 6%. Combined with the inherent advantages of abundant sodium reserves and low raw material costs, the cost parity between sodium-ion batteries and lithium iron phosphate (LFP) batteries is expected to be achieved as early as 2027. For cost-sensitive applications such as commercial and industrial energy storage and light-duty vehicles, companies may consider increasing the proportion of sodium-ion battery solutions in their product selection and supply chain planning.

From a broader perspective, the reinstatement of the consumption tax marks the transition of the new energy industry from a ”policy support phase” to a ”standardized tax burden phase.” The tax exemption policy over the past 11 years has provided strong support for the large-scale development of the lithium-ion battery industry. However, as the industry matures, the role of the tax lever has shifted from ”supporting expansion” to ”guiding quality improvement.” Companies need to move away from a focus solely on scale and toward refined cost management and innovation-driven growth.

Changes in tax policies are irreversible, but businesses can minimize their impact through professional planning. From upgrading tax systems to restructuring cost accounting, and from establishing export tax rebate processes to renegotiating supply chain contracts, every step requires precise execution. Qicaiying Group specializes in providing domestic and international company registration services in Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, the BVI, the Cayman Islands, and other locations, as well as corporate annual review and audit, bookkeeping and tax filing, tax compliance, information updates, bank account opening, ODI filing, FDI filing, and other corporate services; Hong Kong residency application, renewal, and permanent residency services; Singapore EP application services; and cross-border e-commerce mentoring and agency operations. If you have any needs or are interested, please feel free to contact me at any time (Consultation Hotline: 18676749275, add me on WeChat: Qicaiyingjituan).

September 1 is not the end, but rather the beginning of tax standardization in the new energy industry. Companies that prepare for tax compliance in advance will gain a competitive edge in the upcoming industry shakeup; meanwhile, those players who remain on the sidelines may find, on the very first day the new policies take effect, that their profit margins have been quietly eroded by tax costs.