Since the beginning of this year, China’s lithium-battery exports have delivered a stellar performance. According to data released by the China Chemical and Physical Power Sources Industry Association, in January–February 2023, China exported 811 million lithium-ion batteries, up 27.82% year on year, with export value reaching US$14.204 billion, a year-on-year increase of 46.28%. With both volume and price rising, lithium batteries have emerged as the most steadily growing segment among the “new three major exports.”

I. Market Divergence: Sharp Increase in the EU, Contraction in the U.S.

From the perspective of export structure, regional market segmentation is pronounced. Germany is China’s largest export market for lithium batteries, with exports totaling US$2.191 billion in the first two months—up 25.34% year on year. The Netherlands, the third-largest market, recorded exports of US$889 million, representing a dramatic year-on-year surge of 175.09%. Overall, the EU accounts for roughly 43.1% of China’s lithium-battery exports, an increase of 2.6 percentage points compared with 2025. Driven by concerns over energy security, Europe has seen a sustained boom in grid-scale energy-storage installations, making it a key pillar of China’s lithium-battery exports.

In stark contrast, China’s share of lithium-battery exports to the United States has plummeted to 9.7%, a decline of 6.4 percentage points from 2025, while the value of such exports has plunged by 37.92% year on year. The impact of shifting external trade conditions on the U.S. market is becoming increasingly pronounced.

II. The “Export Grabbing” Effect Generates Short-Term Incremental Growth

Analysts attribute the simultaneous increase in both the volume and price of lithium-battery exports to the robust global growth of the power-vehicle and energy-storage industries, as well as to the “rush-to-export” effect that occurred ahead of adjustments to the export-tax-refund policy.

In November 2024, the Ministry of Finance and the State Taxation Administration issued an announcement stating that, effective December 1, 2024, the export tax rebate rate for batteries will be reduced from 13% to 9%. In January 2026, the policy was further tightened: from April 1, 2026, through December 31, 2026, the export tax rebate rate for batteries will be lowered from 9% to 6%; and starting January 1, 2027, the rebate will be completely abolished.

To lock in existing tax rebate benefits, companies have accelerated production scheduling and shipment, while overseas buyers have also stocked up in advance to hedge against the risk of future price hikes, driving a short-term surge in export volumes on both the supply and demand sides. Professor Sun Chuanwang of the China Energy Economic Research Center at Xiamen University pointed out: “The ‘rush-to-export’ effect essentially involves front-loading some of the demand for lithium-battery exports, and it also reflects the strong production capacity resilience of Chinese firms, enabling them to efficiently fulfill massive orders within a short timeframe.”

III. Policy Intent: Compelling the Industry to Abandon “Low-Price Involution”

The successive adjustments to the export tax rebate policy are no accident. At a press conference held by the State Council Information Office, Li Xianzhong, Director-General of the Comprehensive Department of the Ministry of Finance, stated that China’s economy has now entered a stage of high-quality development characterized by accelerated green and low-carbon transformation. Adjusting the export tax rebate rates will help promote the efficient use of resources, guide the rational restructuring of the industrial landscape, and comprehensively address “involutionary” competition.

Some enterprises engage in cutthroat price competition during the export process, even converting export tax rebates into bargaining leverage with overseas buyers, thereby ceding fiscal resources to foreign purchasers at the negotiation stage. This not only erodes domestic firms’ profits but also significantly increases the risk of China’s new-energy industry facing international trade disputes such as anti-subsidy and anti-dumping investigations. The adjustment of the export-tax-refund policy is precisely a targeted correction of this unhealthy low-price competition within the industry. In the medium to long term, the business model of “relying on tax rebates to make up for profit margins and on low prices to capture market share” will be completely rendered ineffective, forcing the elimination of mid- and low-end production capacity that lacks core technologies and shifting competition toward technological innovation and high-value-added applications.

IV. Accelerated Industry Restructuring and Stepped-Up Overseas Expansion

In response to changes in the tax rebate policy, leading battery manufacturers have already taken proactive measures. Yang Hongxin, Chairman of Svolt Energy, stated that the primary objective of abolishing the tax rebate is to bring battery prices back to a reasonable level, and the company is considering accelerating its overseas localization strategy. Zhuhai Guanyu, meanwhile, disclosed that it will mitigate the impact through measures such as adjusting export pricing, speeding up the development of overseas production capacity, and driving technological upgrades.

In the long run, lithium-battery exports are shifting from a focus on single-product shipments to a comprehensive strategy that encompasses capacity localization, technology transfer, and joint standard-setting. Technological innovation and localized operations will be key drivers for companies seeking to further enhance their global competitiveness. In 2025, total global shipments of lithium-ion batteries reached 2,280.5 GWh, up 47.6% year on year, with particularly rapid growth in the energy-storage battery segment, in which Chinese firms have established a dominant position in overseas markets.

The gradual phasing out of tax rebate policies is occurring in tandem with a global surge in demand for new energy. China’s lithium-battery industry is now at a pivotal juncture—shifting from scale-driven expansion to quality-focused advancement—and the curtain has already risen on industry consolidation and a return to intrinsic value.