China introduces consumption levy on lithium-ion batteries, e-bike battery prices set to rise

China ends 11-year tax exemption on lithium-ion batteries, adding 2% from September and 4% next year.

China has ended an 11-year tax exemption on lithium-ion batteries, including those used in electric bikes. A consumption levy will be introduced starting at 2% from September, increasing to 4% by the same time next year. The move reverses a long-standing policy originally aimed at promoting energy conservation.

The tax applies to lithium-ion batteries broadly, meaning e-bike battery packs and cells sourced from China will carry the additional levy. For European importers and dealers, the immediate effect will be higher landed costs on battery purchases, with the impact compounding as the rate doubles within twelve months.

The phased increase gives buyers a limited window to secure stock at the current 2% rate before the 4% levy takes effect. However, the tax is likely to be passed through the supply chain, affecting both complete e-bikes and replacement batteries. Dealers should review existing contracts and forward orders to assess exposure.

The exemption had been in place for over a decade, and its removal signals a shift in China's fiscal approach to battery exports. While the percentages are modest, they add to existing logistics and tariff pressures on e-bike components. Buyers may need to renegotiate pricing or absorb margin reductions.

As the levy rises, sourcing strategies may need adjustment. European distributors could explore alternative battery suppliers outside China, though availability and certification remain factors. The near-term priority is to quantify the cost impact on current inventory and planned orders before the September deadline.