China’s electric vehicle industry rose with the aid of tax breaks.
They publishedChina’s EV industry rose with the aid of tax breaks. What happens when they end?
First reportSouth China Morning Post · 20 Jul, 10:00Z
Latest reportSouth China Morning Post · 20 Jul, 10:00Z
Span0 hours · two reports
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Why it matters
What
China will add consumption tax on lithium-ion batteries from September 1 and on solar cells from April 1.
Why
Analysts estimate the battery levy adds about 1,000 yuan, or US$147, to EV production costs, with margins 3.4% in early 2024.
Watch
Monitor tax rates starting at 2% for batteries, rising to 4% one year later, plus Beijing’s overcapacity and price-war measures.
Where the coverage comes from
Perspective mix: 1 center.
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How it unfolded — every article
Summary
- China will add consumption tax on lithium-ion batteries and solar cells starting September 1 and April 1.
- Analysts estimate the new battery levy adds about 1,000 yuan, or US$147, to EV production costs.
- Rates begin at 2% for lithium-ion batteries and rise to 4% one year after each start date.
- Industry margins were 3.4% in the first five months, leaving manufacturers little room to absorb higher costs.
- Beijing also targets overcapacity and price wars, while prioritizing exemptions for emerging technologies.