According to the latest news from Hangjia Shuo Energy Storage, on July 17, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration jointly issued the "Announcement on Adjusting the Consumption Tax Policy for Certain Batteries" (Announcement No. 20 of 2026), announcing the phased resumption of consumption tax on mature categories such as lithium-ion rechargeable batteries starting from September 1, 2026, while implementing a phased tax exemption for sodium-ion batteries from September 1, 2026, to December 31, 2028.
The details are as follows:
I. Starting from September 1, 2026, a consumption tax will be levied at a rate of 2% on mercury-free primary batteries, metal hydride nickel rechargeable batteries (also known as hydrogen-nickel rechargeable batteries or nickel-metal hydride rechargeable batteries), lithium primary batteries, lithium-ion rechargeable batteries, and all-vanadium redox flow batteries; starting from September 1, 2027, the consumption tax on the aforementioned battery products will be levied at a rate of 4%.
II. Starting from April 1, 2027, a consumption tax will be levied at a rate of 2% on photovoltaic cells (also known as solar cells); starting from April 1, 2028, the consumption tax on photovoltaic cells will be levied at a rate of 4%.
III. From September 1, 2026, to December 31, 2028, consumption tax is exempted for sodium-ion batteries, solid-state batteries, fuel cells, as well as perovskite cells, tandem cells, and gallium arsenide cells among photovoltaic cells.
Hangjia Shuo Energy Storage believes that the most noteworthy aspect of the core provisions of this announcement is the change in taxation for lithium and sodium batteries. The policy shift of "imposing tax on one while exempting the other" creates a reversal of the relative cost gap of up to 8% between "lithium and sodium" in terms of legal tax burden (a 4% cost increase for lithium batteries compounded by a 4% cost saving for sodium-ion batteries). This directly addresses the long-standing cost pain point hindering sodium-ion batteries in energy storage applications, and is expected to significantly narrow the price gap with lithium batteries, accelerating the large-scale penetration of sodium-ion batteries in the energy storage market.
Policy Reversal: From "Lithium Exempt, Sodium Taxed" to "Lithium Taxed, Sodium Exempt", with Relative Gap Reaching Up to 8%
According to the policy context and the detailed rules of this adjustment, the benchmark tax rate for battery consumption tax is 4%:
Return of tax burden for lithium batteries: Lithium-ion rechargeable batteries have been included in the tax-exempt whitelist of seven categories since 2015, enjoying a 0% tax exemption dividend for a long time; starting from September 1, 2026, they will be taxed at 2% first, and from September 1, 2027, the tax rate will be fully restored to 4%.
Legal implementation for sodium-ion batteries: Sodium-ion batteries were not previously included in the 2015 tax-exempt list, and legally have been in a 4% taxable status for a long time (due to the lack of actual collection and administration in the early stage of industrialization); this new policy explicitly clarifies their 0% tax-exempt status for the first time, until the end of 2028.
Reconstruction of cost gap logic: Comparing the relative states before and after the policy reversal, sodium-ion batteries shift from facing a potential 4% tax burden to 0% (saving 4%), while lithium batteries shift from 0% to a maximum of 4% (increasing by 4%).
This relative cost competition gap of one rising while the other falls can reach up to 8%. Even from a cross-sectional perspective in the same period, the 4% tax on lithium batteries and the 0% exemption for sodium-ion batteries after September 2027 also form a 4% statutory tax rate gap. For energy storage projects that are extremely sensitive to initial investment costs, this is not only a numerical change in taxes and fees, but also a key variable to break the cost deadlock of sodium-ion batteries.
Sudden Reduction in Resistance for Energy Storage Applications: Sodium-Ion Batteries Usher in a 28-Month Golden Window
It is widely recognized in the industry that the reason sodium-ion batteries have been slow to replace lithium batteries on a large scale in the energy storage track lies in the cost disadvantage before scaling up. Constrained by the incomplete domestic production of materials such as hard carbon anodes and yield rate issues, the cost of sodium-ion battery cells was previously higher than that of lithium batteries, lacking overwhelming economic driving force.
The tax exemption dividend following the introduction of this consumption tax will directly resolve this resistance from two aspects:
Direct cost reduction to hedge premium: Calculated based on the current cost of energy storage cells, the tax exemption for sodium-ion batteries not only avoids this new cost, but compared to the increased tax burden on lithium batteries, it is equivalent to further expanding the comprehensive cost competitive advantage range by about 6%~8% on the basis of the original price, significantly narrowing the quotation gap with lithium iron phosphate (LFP) systems.
Advancement of the economic tipping point: In energy storage scenarios sensitive to the Levelized Cost of Energy (LCOE), the decrease in initial investment brought by tax and fee reductions may enable some sodium-ion battery solutions to cross from the "edge of economic viability" into the "procurement attractiveness" range, stimulating downstream owners to shift from waiting and seeing to pilot installations.
The tax exemption window defined in this announcement ends on December 31, 2028, which essentially leaves a golden sprint period of about 28 months for sodium-ion batteries. During this period, sodium-ion battery enterprises need to utilize the dual dividends of "tax exemption + resource autonomy" to accelerate capacity release and technology iteration, aiming to level or even lower the total lifecycle cost compared to lithium batteries before the potential taxation node in 2029.
However, the tax exemption for sodium-ion batteries is not "barrier-free". Article 4 of the announcement explicitly stipulates that battery products enjoying tax reduction and exemption must comply with the national standards for the product. Before the taxpayer declares the reduction and exemption of consumption tax for the first time, they must obtain an inspection report conforming to the national standard issued by an inspection institution. The inspection institution must hold a CMA qualification certificate issued by the market regulation department at or above the provincial level, and its appendix must include the corresponding battery inspection items. This means that only leading enterprises with compliant national standard products and authoritative inspection reports can truly reap the benefits of this policy dividend, while low-end capacity chasing hotspots will be kept out.
Consequently: Previously, the energy storage industry was characterized by "the dominance of lithium batteries and the high cost of sodium-ion batteries hindering penetration". After the new consumption tax policy is passed, the biggest stumbling block of cost is partially removed by the policy dividend. Leveraged by the relative cost gap of up to 8% (or a 4% tax rate gap in the same period), sodium-ion batteries, with the temperature control cost advantage brought by their wide-temperature performance, will further strengthen their substitution logic in scenarios such as large-scale wind and solar energy storage in wide-temperature zones and distributed energy storage with ample space, which are sensitive to safety and total lifecycle costs and have high tolerance for footprint.
Hangjia Shuo Energy Storage believes that this policy is not a simple tax cut, but a structural adjustment of "returning to normal taxation for mature technologies (such as lithium batteries) and cultivating emerging technologies (such as sodium-ion batteries) through tax exemption". Within the window period before the end of 2028, the penetration rate of sodium-ion batteries in the energy storage sector is expected to accelerate due to improved economics.
Of course, its boundaries must also be faced squarely: limited by the current energy density and industrial maturity, both of which are lower than those of lithium batteries, and the relatively high comprehensive system cost, it is indeed difficult for sodium-ion batteries to shake the mainstream status of lithium batteries in the short term. However, this physical shortcoming does not affect its structural rise in the energy storage landscape. China's energy storage industry is accelerating from "single-core drive of lithium batteries" to a brand-new pattern of "sodium-lithium complementarity and scenario diversion".