Starting from April 2026, the export value-added tax rebate rate for power batteries will be reduced again, from the previous 9% to 6%, and it will be completely canceled from 2027.
This policy adjustment aimed at promoting industrial upgrading has quickly triggered a chain reaction in the industry in the past two months.
Although the fundamentals of China’s power battery exports remain solid, the growth rate has slowed down significantly.
Data from the China Automotive Power Battery Industry Innovation Alliance show that in the first four months of 2026, the cumulative export volume of power and energy storage batteries maintained year-on-year growth, but the single-month export volume in April fell by about 12% month-on-month, ending the previous rapid rise.
This shows that the concentrated “rush for exports” behavior before the policy window period has overdrafted subsequent demand to a certain extent.
Overall, exports account for close to 20% of the industry’s total shipments. The status of overseas markets as a key growth pole has not changed, but the old path of relying on low prices has been blocked by policies.
This policy “cold wave” has varying impacts on the industrial ecology, showing significant structural differentiation.
Small and medium-sized enterprises that rely on tax rebate subsidies to support profits are experiencing pain, while leading companies with technology and overseas production capacity are relatively calm.
An industry reshuffle with policies as catalysts has begun.
This adjustment to export tax rebates is not sudden.
Looking back, the value-added tax export rebate rate for battery products has been reduced from 13% to 9% in December 2024. This year’s further reduction to zero shows the country’s continuity and determination to promote industrial structural reform.
The direct impact of policy adjustments has left a clear mark on April’s export data.
Yuan Shuai, deputy secretary-general of the Zhongguancun Internet of Things Industry Alliance, said that during the two-month policy transmission period, the domestic power battery export market has shown clear structural changes.
Although leading companies have not experienced large-scale defaults on overseas long-term orders, “the export growth rate that originally climbed month by month has dropped significantly, and the drop in scattered orders from small and medium-sized manufacturers that had previously poured into cross-border trade was particularly significant.”
Why choose to cool down the power battery outlet at this time?
The core intention is to end the “involution and externalization” of Chinese enterprises in overseas markets.
Gao Chengyuan, president of the Tiaoyuan Impact Research Institute, analyzed that this move is intended to “cut off the blood vessels of ‘involution and externalization’.”
He said that in the past, some companies used tax rebates as ammunition for price wars and dumped products at low prices overseas, which not only consumed domestic financial resources but also easily caused trade frictions.
Yuan Shuai pointed out that the fundamental purpose of the policy is to “force the industry to get rid of the low-quality growth path of ‘price-for-volume'” and prevent domestic manufacturers from falling into vicious price wars overseas in the context of high production capacity, which will ultimately damage the international image of the entire Chinese power battery industry.
From a deeper perspective, this move is also a proactive response to external compliance pressures such as the EU’s “New Battery Law” and the Carbon Border Regulation Mechanism.
Gao Chengyuan believes that this can “promote China’s battery industry to adapt to high-standard international competition rules in advance”, shift policy-driven to market-driven, and screen out companies that truly have technology, brand and global operation capabilities.
The shock wave of the tax rebate “retreat” has shown completely different effects on companies of different magnitudes.
For those small and medium-sized manufacturers and some second-tier companies that lack core technologies and rely on low-price competition, this is a life-and-death test.
Yuan Shuai said: “The original profit margins of these companies are very slim. Most of them rely on the 9% export tax rebate to cover the cost of going abroad. Some even count the tax rebate directly into core profits. After the tax rebate rate was reduced by 3 percentage points, the profits of many scattered orders were directly wiped out.”
A staff member working for Wald New Energy expressed his emotions more directly on the social platform. He said that the policy “is undoubtedly a major blow to our lithium battery pack small and medium-sized enterprises.” Increasing prices to customers means losing competitiveness. Maintaining the original price is unprofitable, and it also faces vicious competition from peers using low prices to seize the market.
According to calculations by Wang Wei, a veteran in the battery industry, if the cost of tax rebate reduction is entirely borne by export companies themselves, gross profits will drop by 10% to 12% in 2026. If tax rebates are completely cancelled, profits will drop by more than 30% by 2027.
However, for the giants in the power battery industry, the storm is much calmer.
The overseas production capacity layout of leading companies such as CATL and BYD has entered the release period, and localized production can directly avoid the impact of changes in export tax rebates.
The profit margins of such enterprises are sufficient to support the reduction of tax rebates, and some may even benefit from the withdrawal of small and medium-sized competitors.
Policies have accelerated the reshuffle of the industry, and resources and orders are gathering at the top.
Faced with fundamental changes in the policy environment, the response strategy of the entire power battery industry is unfolding along the path of short-term cost reduction, mid-term production capacity overseas, and long-term technology upgrading.
In the short term, refined cost control and profit pressure transmission are key.
Gao Chengyuan proposed that companies must complete “cost reconstruction” and reduce internal losses through process improvement, supply chain digitization and lean management. At the same time, they must “renegotiate price terms with overseas customers and cannot bear the tax refund losses alone.”
Wang Wei also emphasized the importance of cost transmission capabilities, believing that companies need to “continue to maintain technology and cost leadership and be able to smoothly transmit the pressure of price increases to overseas users.”
In the medium-term strategy, the shift from “products overseas” to “capacity overseas” has changed from optional to mandatory.
Establishing factories, warehousing and after-sales systems in overseas target markets can not only avoid export cost fluctuations, but also better respond to local customers.
Gao Chengyuan gave a specific path reference: “Southeast Asia is close to the origin of raw materials and is tariff-friendly, while Europe needs to support green power to meet carbon footprint compliance.”
In the long run, the core of getting rid of low-price competition lies in building technical barriers.
Yuan Shuai suggested that companies must shift their energy to technology research and development, and replace the original “policy dividend” with “technology premium” by increasing energy density and optimizing product adaptability.
In addition, companies can also move up to higher-value links in the industrial chain, that is, break away from the low-value-added model of “selling batteries” and extend to high-margin links such as solid-state batteries, energy storage system integration, and battery recycling.
Short-term pain is inevitable for this policy-induced change.
A group of companies with weak competitiveness may be eliminated, and the industry’s export growth is experiencing a phased decline.
But in the long term, this “weaning” operation is forcing China’s power battery industry to accelerate its shift from a price-driven model of “price for volume” to a technology-driven and globalized operation model of “winning with quality.”
China’s battery industry will upgrade from “product output” to “industrial chain output” and occupy a more active position in the global value chain.
From passively bearing pressure to proactively seeking change, companies are collectively undergoing a profound strategic reshaping.
