China’s EV and battery makers tussle over paying resumed lithium-ion tax: sources

Squeezed EV makers object to eating the cost, and negotiations on splitting the tax continue weeks after its official resumption, sources say Beijing is ending an 11-year exemption on a 4 per cent consumption tax on lithium-ion batteries and related products. It returned to 2 per cent on September 1 and will be fully restored one year later. The country’s battery makers planned to pass the costs on to their clients in the downstream industry. For example, the fifth-largest battery maker by volume, EVE Energy, planned to add the 2 per cent consumption tax to domestic orders that shipped after September 1, according to a notice it issued to clients on July 24. But with their profitability squeezed amid reduced subsidies and weakening domestic demand in the world’s largest EV market, EV makers saw no choice but to push back, according to two people familiar with the matter.

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