On November 15, the Ministry of Finance and the State Administration of Taxation in China made an announcement that sent ripples through the energy storage and battery industries. The export tax rebate rates for a number of products, including refined oil, photovoltaics, batteries, and certain non-metallic mineral products, were slashed from 13% to 9%, with lithium-ion batteries and related items
On November 15, the Ministry of Finance and the State Administration of Taxation in China made an announcement that sent ripples through the energy storage and battery industries. The export tax rebate rates for a number of products, including refined oil, photovoltaics, batteries, and certain non-metallic mineral products, were slashed from 13% to 9%, with lithium-ion batteries and related items falling under this reduction.
Almost immediately, the stocks of energy storage and battery-related enterprises witnessed significant fluctuations. An employee from an energy storage firm commented, "The decrease in export tax rebates directly hikes the costs for companies in the energy storage sector and squeezes their profit margins. This will substantially intensify the operational stress on leading enterprises with extensive overseas operations and mid-sized companies that rely heavily on these rebates."
China has emerged as a dominant force in the production of energy storage systems and lithium batteries. In recent years, overseas orders have skyrocketed in tandem with the expansion of production scales. Based on incomplete data from the Energy Storage Application Branch database of the CESA, between January and October 2024, Chinese energy storage firms clinched over 120 overseas orders, amounting to more than 115 GWh. Of these, energy storage batteries accounted for the lion's share at 68.51 GWh.
The first-half 2024 financial report of CATL (Ningde Times) reveals that its overseas business constitutes over 30% of total sales, with a gross margin reaching 29.65%. Other industry leaders such as Sungrow Power Supply Co., EVE Energy Co., Ltd., and Penghui Energy have also reported robust order performances.
Industry experts anticipate that this policy adjustment could set off a domino effect, deeply affecting major players actively engaged in international markets. Moreover, the escalating export costs might undermine their competitiveness overseas. In well-established markets like Europe and America, where domestic manufacturing is on the rise and price competition is intensifying, Chinese products, which previously had a price edge, will now face inevitable battles for market share despite the continuous squeeze on profit margins.
In emerging markets represented by Africa and Southeast Asia, where consumers are highly price-sensitive, the already low-cost exported energy storage products face a dilemma. Any attempt to increase prices due to cost pressures could lead to a loss of market share.
However, some academic scholars contend that this tax policy might expedite the restructuring of China's domestic energy storage industry and boost overall technological progress. While weaker companies with limited cost control and lower technological capabilities may struggle or even be forced out of the market, from a macro perspective, it could optimize the industry structure by curbing homogeneous competition and presenting growth prospects for competitive enterprises.
Consequently, under mounting cost pressures, companies must redouble their efforts in innovation and cost management strategies to augment product competitiveness, which will have a favorable impact on the technological advancement of the industry.