China Scraps Battery Export Tax Rebate, Accelerating New Energy Sector Shakeout

In January 2026, China’s Ministry of Industry and Information Technology (MIIT) and three other government departments jointly summoned 16 battery manufacturers—including CATL and BYD—urging them to optimize production capacity and standardize market competition. Meanwhile, the Ministry of Finance announced it would phase out export tax rebates for lithium-ion batteries starting in April 2026, with a complete termination effective from 2027. The move aims to curb uncontrolled expansion and low-price dumping overseas, alleviate trade tensions, and shift the industry’s focus from competing on subsidies to competing on technological innovation. The policy is expected to significantly impact smaller manufacturers heavily reliant on export rebates, while leading enterprises—with their scale advantages and established overseas operations—are better positioned to weather the changes. Analysts note that China’s battery exports have already begun shifting toward the European Union and Southeast Asia, as the U.S. market continues to shrink. Proactively adjusting rebate policies is seen as helpful in stabilizing global market expectations. China’s new energy sector is now entering a new phase of “high-quality contraction,” accelerating industry consolidation and highlighting a clear trend of market-driven selection where only the strongest survive.