New Battery Consumption Tax Policy Landed: Sodium-Ion Batteries Exempt, Lithium Batteries Taxed, and Sodium-Ion Batteries Usher in a “Tax-Free Dividend Period” [SMM Analysis]

SMM, July 21 –

The Ministry of Finance, the General Administration of Customs, and the State Taxation Administration recently jointly issued an announcement on adjusting the battery consumption tax policy, for the first time including lithium-ion batteries, among others, in the consumption tax scope, while adding sodium-ion batteries, solid-state batteries, fuel cells, etc., to the exemption list. This “one tax, one exemption” design has drawn widespread attention across the sodium-ion battery industry chain.

I. Policy Framework: Two-Step Taxation + Targeted Exemption

Taxation side: From September 1, 2026, a consumption tax will be levied on lithium-ion batteries, etc., at a rate of 2%; this will rise to 4% from September 1, 2027. For solar cells, the tax will be postponed to April 2027, with the tax rate raised in a stepwise manner accordingly.

Exemption side: From September 1, 2026 to December 31, 2028, sodium-ion batteries, solid-state batteries, fuel cells, etc., will be exempt from consumption tax, a window period of approximately two and a half years, covering the critical stage from mass production to large-scale commercialization of sodium-ion batteries.

The announcement also abolished the Finance and Taxation [2015] No. 16 document. The old policy did not explicitly include lithium batteries in the taxation scope; the new regulation fills this gap by formally adding lithium batteries to the taxable scope, while sodium-ion batteries are placed on the encouraged exemption list, reflecting a clear policy direction.

II. Cost Impact: Tax Burden Difference Becomes Explicit, Cost Balance Tilts Faster

Currently, the cost of sodium-ion battery cells is about 0.5 Yuan/Wh, and their cost advantage is not significant. The introduction of the consumption tax will reshape the landscape: under the battery industry’s “every cent counts” competitive logic, it may influence downstream procurement decisions. More critically, the consumption tax is a tax included in the price, directly added to production costs. Lithium battery enterprises’ profit statements will be under direct pressure, while sodium-ion battery enterprises can achieve higher gross margins or, at the same profit margin, further pass on benefits to downstream.

III. Application Divergence: Energy Storage Benefits First, Power Batteries Still Need Time

The energy storage track benefits most directly. After the new consumption tax on lithium batteries, sodium-ion batteries in energy storage applications at C-rates below 0.5C are expected to achieve life cycle cost per kWh on par with or even lower than that of LFP. Combined with sodium-ion batteries’ inherent advantages in low-temperature performance and safety, energy storage is poised to become the first breakthrough for mass production and volume ramp-up of sodium-ion batteries.

The two-wheeler segment is seeing accelerated penetration. Sodium-ion batteries, positioned in the lead-acid replacement market with higher energy density than lead-acid and superior safety over lithium batteries, were already in a period of accelerating penetration; the new consumption tax policy further widens the price spread.

Power batteries still need time. Sodium-ion batteries still lag behind LFP in energy density, and the consumption tax benefit is more of “icing on the cake” in this field.

IV. Industry Chain Transmission and Urgency of the Window Period

The policy impact will be transmitted along the path of “confidence → investment → capacity → cost reduction.”Key material segments such as hard carbon anodes and layered oxide cathodes are expected to be among the first to benefit. Midstream battery cell enterprises' mass production decisions have gained a policy anchor, and the previous concern that "low lithium prices suppress the economic viability of sodium-ion batteries" has been substantially offset.

It should be noted that the exemption window closes at the end of 2028, during which enterprises must complete three iterative rounds of material finalization, process maturity, and scale-driven cost reduction. If by then sodium-ion batteries still cannot achieve economic viability independent of policy support, they will face the risk of being brought into the scope of taxation. In addition, Article 4 of the announcement requires that products comply with national standards and obtain a CMA testing report to qualify for the tax reduction or exemption; enterprises should start compliance preparations as soon as possible.

V. Conclusion

The joint announcement by three departments represents the strongest policy boost for the sodium-ion battery industry to date. Unlike previous supply-side policies such as R&D subsidies, the consumption tax exemption is a demand-side policy that helps alter the relative cost structure between sodium-ion and lithium batteries, tilting the market mechanism in favor of sodium-ion batteries. Moving from "policy-driven demonstration" to "market-driven substitution," sodium-ion batteries are at a critical turning point. Whether they can deliver a satisfactory economic viability report card before the end of 2028 will define their long-term competitive position. SMM will continue to track the dynamics of the sodium-ion battery industry chain.

SMM New Energy Research Team

Wang Cong 021-51666838

Feng Disheng 021-51666714

Lyu Yanlin 021-20707875