China's battery tax: E-cars must build cells themselves

No Longer Tax-Free China's Battery Tax Forces In-House Cell Production

2026-08-05 From Henrik Bork | Translated by AI 6 min Reading Time

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Beijing is taxing drive batteries again for the first time in over ten years. Those who buy cells instead of producing them themselves pay the tax. This benefits corporations like BYD and intensifies market consolidation.

The tax exemption for batteries in China is being abolished. Only battery cell manufacturers will continue to be exempt from taxes.(Image: BMW) — The tax exemption for batteries in China is being abolished. Only battery cell manufacturers will continue to be exempt from taxes.
(Image: BMW)

China is taxing car batteries again. Starting September 1, the state will impose a consumption tax on lithium-ion batteries for the first time in more than ten years—initially two percent of the sales price, and from September 2027, four percent.

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