What's Happening?
China has announced the elimination of export tax rebates for batteries by 2027, marking a significant shift in its economic policy. Historically, these rebates have provided Chinese battery manufacturers with a cost advantage of 6% to 9% on exports,
supporting their competitiveness in international markets. The policy change will be implemented in two phases: a reduction of the rebate rate from 9% to 6% in April 2026, followed by a complete elimination in January 2027. This move is expected to reshape global competitive dynamics in the energy storage sector, as Chinese manufacturers will no longer benefit from government subsidies to maintain low export prices.
Why It's Important?
The removal of export tax rebates is likely to increase the cost of Chinese battery exports, affecting global pricing structures and competitive positioning. This change could benefit battery manufacturers in other regions, such as Korea, Japan, Europe, and North America, by leveling the playing field. It may also lead to higher lithium prices, as Chinese manufacturers adjust to the new cost structures. The policy shift aligns with broader trends in supply chain diversification and strategic mineral security, potentially accelerating investment in non-Chinese battery manufacturing and critical mineral projects.
What's Next?
As the policy takes effect, Chinese battery manufacturers are expected to optimize production schedules and inventory management to maximize benefits from existing rebate structures. The global battery market may experience increased volatility as stakeholders adjust to new pricing mechanisms. Non-Chinese manufacturers could see increased demand and investment, while Chinese companies may need to enhance operational efficiency to remain competitive. The policy change may also influence international trade negotiations and industrial policy coordination among major battery-importing regions.
