China's 2% consumption tax on lithium-ion batteries takes effect September 1. The first post-September price prints from InfoLink and SMM will carry basis changes that look like price moves if read week-over-week without adjustment.
The product boundary matters most. Cells and clusters are taxable; a complete ESS with electrical, thermal, and control systems is not (STA Q&A, August 27). CT paid on cells cannot be deducted when those cells go into a non-taxable product like a complete ESS or an EV (PwC, July 24). Cell and system quotes should diverge accordingly.
InfoLink's tax-inclusive series will blend three cohorts in the same weekly print: pre-September deliveries carrying no CT, repriced undelivered orders (some cell makers sent adjustment notices by August 26), and new post-September contracts with full CT invoicing. Cost movement and tax-recovery variation will be inseparable in the aggregate number.
Two additional breaks land the same week: SMM retires several pack benchmarks after August 28, and Fastmarkets implements revised CIF CJK lithium methodology September 1 with no historical restatement.
Taxable: Cells, clusters, lithium primary, NiMH, vanadium redox flow. 2% through August 2027, then 4%.
Not taxable: Complete ESS with electrical, thermal, and control systems. Sodium-ion and solid-state also exempt.
Deduction blocked: CT on cells used to produce a non-taxable product (complete ESS, EVs) cannot be deducted. PwC flags the EREV analogy explicitly.
Export treatment: Cell exports likely CT-exempt. Whether exported complete ESS qualifies is unresolved; STA's August 27 Q&A is silent on this case.
Cash-flow timing: Downstream producers owe CT before receiving upstream deduction vouchers, which must carry post-September dates. Short-term margin compression even where deductibility applies.
SMM pack series: Terminated after August 28. No replacement series identified.
Fastmarkets CIF CJK: New methodology September 1. Transition spread published August 28. Historical series not restated.