China Battery: Consumption Tax: A devastating blow or a chance to reshuffle?

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China Battery: Consumption Tax: A devastating blow or a chance to reshuffle?

J P M O R G A N Asia Pacific Equity Research

18 July 2026

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China Battery

Consumption Tax: A devastating blow or a chance to

reshuffle?

China announced a new battery consumption tax policy on July 17, imposing a 2% Asia Autos & EV Battery

ACconsumption tax on lithium-ion batteries from 1st September 2026 and 4% from 1st Rebecca Wen

September 2027, while exempting sodium-ion and solid-state batteries through (852) 2800-8505

end-2028. Key takeaways: First, the policy is broadly in line with prior industry rebecca.y.wen@jpmorgan.com

expectations and removes a source of uncertainty for the sector. Second, while the J.P.MorganMorganBrokingSecurities(Hong (AsiaKong)Pacific)LimitedLimited/ J.P.

headline earnings impact could become more meaningful in 2027-28 under a full-

Shirley Feng

absorption scenario, leading battery makers such as CATL should be better (86-21) 6106-6149

positioned to pass through the additional tax burden than smaller peers. Third, we shirley.x.feng@jpmorgan.com

view the policy as consistent with China’s broader battery supply-side reform SAC Registration Number: S1730524040001

agenda and expect it to further support industry consolidation and supply discipline J.P. Morgan Securities (China) Company Limited

over time. Higher tax could add to the burden across the value chain, but CATL Cathy Liu

should see the least effect and remains our top pick in China’s battery universe.