China starts taxing batteries and the electric car becomes more expensive there

China has begun levying taxes on the batteries that underpin its electric car industry. Since September 1, lithium-ion cells and packages have paid 2% consumption tax — a rate that rises to 4% on September 1, 2027 — ending an exemption that had been in place since 2015.

The effect on the pocket is small, but the signal is clear. According to a calculation by the specialized website CarNewsChina, a 60 kWh lithium iron phosphate battery is about 438 yuan (approximately R$ 333) more expensive at the 2% rate, a value that doubles to 876 yuan (about R$ 666) when the tax reaches 4%.

The measure is the third piece of the gradual dismantling of benefits to the sector. Since January 1, the total tax exemption on the purchase of electric and hybrid vehicles has been replaced by a 50% discount — an effective rate of 5%, with a ceiling of 15 thousand yuan (about R$ 11,400) per car. And, as of January 1, 2027, the rebates on the tax on vehicles and vessels, a policy that had been in force for 15 years, will also fall.

Beijing has already chosen the next bet

What Beijing left out of the tax says more than the tax itself. Sodium-ion, solid-state and fuel cell batteries remain exempt until December 31, 2028 — a two-year tax advantage for the technologies the government wants to see scale.

A detail that went almost unnoticed outside the technical press: the text exempts the cells consumed within the manufacturer’s own production line. In practice, a stimulus for automakers to make their own batteries instead of buying them.

Reflection in Brazil is indirect

Exported batteries remain free of consumption tax, which limits the immediate impact on the prices of Chinese electric vehicles sold here. There is, however, another movement: the VAT credit for battery exports fell from 9% to 6% in April and will be extinguished on January 1, 2027.

Here, the scenario has already changed on its own: since July, imported electric and hybrid vehicles have paid a maximum rate of 35% import tax, and only models manufactured in the country escape.

China preserves the state financing of the battery recharging and exchange network and the exemption from urban road maintenance fees, which there are embedded in the price of fuel – a role similar to that of Cide in Brazil, where the electric owner still pays IPVA in most states.

The tightening is not only fiscal. At the end of August, the Ministry of Industry and Information Technology released the result of its annual compliance inspection and cited seven models with divergences from what had been declared. Among them, the electric Geely EX2, whose wheelbase was outside the allowed 1% margin, and the BYD Qin L DM-i plug-in hybrid, with fuel consumption above that reported by the manufacturer.