China Ends 11-Year Tax Break on Lithium-Ion EV Batteries
· Business · Nikkei Asia, asia.nikkei
China has ended a tax exemption on lithium-ion EV batteries that has been in place for 11 years, effective from 2026. The move, announced by the finance ministry alongside the State Taxation Administration, removes a policy that had supported the country's electric vehicle supply chain since 2015. The tax break will be phased out for all lithium-ion battery production, with full removal applied nationwide rather than targeting specific manufacturers. The policy shift aligns with Beijing's plan to reduce industrial subsidies and let market forces play a larger role in the EV sector. The finance ministry did not specify the exact tax rate structure that will replace the exemption, nor did it outline a transition timeline for affected producers. The change comes as China's EV battery industry has grown dominant globally, raising questions about how domestic policy shifts will ripple to international competitors and raw material suppliers.
Why it matters
The tax change affects global EV battery supply chains, where Chinese firms account for most production capacity, potentially raising costs for Indian automakers and component suppliers that rely on Chinese imports.
Read the original report — Nikkei Asia
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