Shares in the lithium battery sector displayed a mixed performance during early trading. At the time of writing, CALB (03931) had declined by 8.54% to HK$17.25, while Tianqi Lithium Corporation (09696) was down 3.51% to HK$31.42. Ganfeng Lithium Group Co.,Ltd. (01772) fell 1.16% to HK$37.38. In contrast, CATL (03750) saw a gain of 1.9%, trading at HK$618.
Background on the Policy Shift
This movement follows a recent joint announcement by the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration. The announcement stated that, starting September 1, 2026, a 2% consumption tax will be levied on established battery products such as lithium primary batteries and lithium-ion batteries, with the rate increasing to 4% from September 1, 2027. Concurrently, emerging technologies including sodium-ion batteries and solid-state batteries will enjoy a staged tax exemption until the end of 2028. This marks the official end of a consumption tax exemption policy for electric vehicle lithium batteries that had been in place for over a decade.
Analyst Assessment of the Impact
Analysts from Huaxi Securities have expressed the view that the imposition of this consumption tax will have a limited effect on the lithium battery industry. According to data from SMM, based on the weekly average price of square lithium iron phosphate batteries at 0.367 yuan/Wh as of July 17, the implementation of 2% and 4% tax rates would increase prices by approximately 0.007 yuan/Wh and 0.015 yuan/Wh, respectively. This suggests the cost impact is manageable. Furthermore, the tax exemption for qualifying sodium-ion batteries, solid-state batteries, and fuel cells until the end of 2028 is expected to facilitate the commercialization and broader adoption of these new technologies.
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