China is steering its industrial policy toward a new chapter in battery technology, formally shifting tax incentives from mature lithium-ion production to next-generation cells. A joint announcement from the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration confirms that sodium-ion and solid-state batteries will receive a full consumption tax exemption through the end of 2028, while lithium-ion cells will begin losing their longstanding fiscal privileges.
A Phased Rollback for Lithium-Ion
Starting September 1, 2026, lithium-ion batteries will incur a 2 percent consumption tax, a levy that climbs to 4 percent one year later. The move ends an exemption that has been in place for more than a decade, a period during which Chinese manufacturers scaled to dominate global cell and component supply. Officials now view lithium-ion as a commoditized, mature product capable of bearing standard taxation.
By contrast, sodium-ion and solid-state batteries—technologies previously excluded from the original exemption and therefore subject to a 4 percent consumption tax since 2015—will be shielded from the levy for at least the next three years. The reversal arrives as CATL, BYD, and a wave of other manufacturers prepare pilot production lines for solid-state cells, and shortly after China published the world’s first global solid-state battery standard.
A Familiar Policy Pattern
The approach mirrors the playbook that propelled China’s electric-vehicle sector. Rather than picking winners through direct subsidies that might risk conflict with World Trade Organization rules, policymakers adjusted the cost structure, making favored technologies cheaper to produce and purchase than those they considered legacy. In the battery arena, that mechanism now pivots decisively toward sodium-ion and solid-state chemistries.
Sodium-ion technology, long valued for its cost advantages and independence from lithium supply chains, stands to gain further ground. Already approaching cost and energy-density parity with LFP cells, it is now reaching retail channels as a lead-acid replacement, as seen in products like the Napow 50 Ah 12V car battery.
New Entrants Skip a Step
Solid-state batteries, which CATL estimates remain several years from mass production, can use the exemption as an early investment in a manufacturing ecosystem China aims to dominate ahead of international competitors. Some battery startups in China are bypassing conventional lithium-ion or liquid-electrolyte stages entirely—where they cannot match established giants like CATL or BYD—and moving directly to solid-state or sodium-ion cells. That shift, combined with the new tax framework, points to a battery industry landscape that may look markedly different within a few years.
Sources: szs.mof.gov.cn, cnevpost.com