China Battery: Assessing implications of consumption tax resumption: CATL screens as most resilient — Buy A/H

Research evidence excerpt

China Battery: Assessing implications of consumption tax resumption: CATL screens as most resilient — Buy A/H

Equity Research

19 July 2026 | 5:33PM HKT

China Battery: Assessing implications of consumption tax resumption.

CATL screens as most resilient — Buy A/H

What happened? On July 17, 2026, China’s Ministry of Finance, China Customs, and Nick Zheng, CFA

+852-2978-1405 | nick.zheng@gs.com

State Taxation Administration jointly issued the “Notice on Adjusting the Consumption Goldman Sachs (Asia) L.L.C.

Tax Policy for Certain Battery Products”. Under the revised policy, China will phase out Selina Yan

its decade-long consumption tax exemption for mature battery products. From Sep +852-2978-0178Goldman Sachs (Asia)| shuling.yan@gs.comL.L.C.

1, 2026, primary lithium batteries and lithium-ion batteries will be subject to a 2%

consumption tax, rising to the standard 4% rate from Sep 1, 2027. To support

technological innovation, next-generation battery technologies will remain

temporarily exempt from Sep 1, 2026, through Dec 31, 2028, including sodium-ion

batteries, solid-state batteries, fuel cells, and advanced PV technologies.

GS View: We view the policy change as manageable for sector leaders but more

challenging for domestic-centric, lower-profitability battery makers, reinforcing our

view of continued market-share consolidation. CATL screens as the most resilient

name in our coverage, while most Tier-2/3 players face greater earnings sensitivity.

Downstream, the impact appears limited for passenger vehicles and eHDTs under full

pass-through, but BESS projects look more exposed given tighter return thresholds.

Near term, anticipation of the consumption tax resumption could pull forward

demand ahead of the implementation dates. We will monitor management