China has begun phasing out the long-standing consumption-tax exemption for lithium batteries, in a move expected to increase costs across the electric-vehicle supply chain and accelerate the withdrawal of preferential tax treatment for new-energy vehicles.

 

Under a joint announcement issued by the State Taxation Administration and other government departments, lithium primary batteries and lithium-ion rechargeable batteries will be subject to a 2% consumption tax from Sept. 1, 2026. The rate will rise to 4% from Sept. 1, 2027.