China Policy Shift: Cell Costs Rise, the Ultra-Cheap Storage Era Is Ending

Executive Takeaway

What’s happening? - Cell Price & Manufacturing Cost are set to rise due to China policy changes

China is tightening export support for solar and battery products by reducing and phasing out export VAT rebates, while upstream cell material costs are becoming more volatile. In simple terms: the policy tailwind that helped keep export prices ultra-low is fading, and cell costs are more likely to move up.

What does this mean for you? - Higher Purchasing Price and Less Predictable Lead Times

Your landed cost for energy storage systems is likely to rise, and the “cheap yet good-quality” pricing many buyers enjoyed will be harder to find. You may also see less stable lead times as orders get pulled forward and supply chains become more congested.

What should you do? - If Storage is a must for you, buy it earlier

If you’re planning a purchase, consider securing your order window earlier and prioritize suppliers with proven quality, reliable delivery, and strong after-sales support—because the ultra-low price era is closing.

Details

1) Why China sets the price floor in global PV market

China dominates the global PV supply chain: its share across key manufacturing stages exceeds 80%, and China’s solar cell production accounted for over 90% of global production in 2023. This concentration has been a major driver of worldwide cost declines—and also means policy changes in China quickly transmit to global pricing.

2) The policy shift: export rebates are being rolled back

China has announced a clear change in direction:

PV products: VAT export rebates will be cancelled from April 1, 2026.
Battery products: VAT export rebates will be cut from 9% to 6% (Apr–Dec 2026) and then scrapped entirely from Jan 1, 2027.
This comes after an earlier reduction (e.g., PV rebates 13% → 9% in Dec 2024), signaling a multi-step tightening rather than a one-off move.

What it means in plain terms:

export incentives that previously supported low overseas pricing are being removed, raising exporters’ cost base and pushing the market toward more “rational” pricing.

3) Why this is happening (and why it matters to buyers)

Policy intent is explicit: curb excessive price wars, reduce overcapacity pressure, and lower trade-friction risk caused by “rebate-as-discount” exporting behavior.

For buyers, that translates into three practical outcomes:

Export costs rise structurally (rebate removal is a direct cost increase).
Industry consolidation accelerates—low-quality, ultra-low-margin players become less viable.
The ultra-cheap window narrows—even if spot prices fluctuate, the long-term floor is likely higher than the “price-war + incentives” era.

4) Battery cell costs: upstream volatility is rising again

Beyond fiscal policy, cell costs are also sensitive to upstream material supply and regulatory constraints. Recent examples show how quickly supply disruptions can move prices: CATL suspended mining operations at its Yichun project due to license expiry, and lithium carbonate futures surged (reported as up to 8%).

At the same time, industry analysis points to increased oversight and permitting complexity in China’s lithium supply chain, which can slow response speed and raise compliance/capex burdens—adding volatility and cost pressure over time.

What buyers should do now

1) Plan procurement earlier

2) Choose products with real warranty

3) Choose suppliers with advanced R&D capabilities

Expect potential order “front-loading” ahead of April 1, 2026 and a different pricing baseline after.

As the market normalizes, total lifecycle cost (failure rate, warranty handling, support capability) matters more than headline price.

Choose suppliers who can prove engineering depth, stable QC, and after-sales execution—because the “cheap price covers all risks” era is ending.

Reference

[1] Reuters. China to scrap export tax rebates for photovoltaic and battery products. Jan 9, 2026.

[2] China Briefing. Navigating China’s Latest Export Tax Rebate Adjustments: What Are the Implications? Dec 4, 2024.

[3] International Energy Agency (IEA). Solar PV Global Supply Chains – Executive Summary. 2022.

[4] International Energy Agency (IEA). Renewable Energy Market Update – June 2023 (PV manufacturing capacity expansion). 2023.

[5] Reuters. China solar panel manufacturers seek government action to halt freefall in prices. Jun 12, 2024.

[6] Reuters. Lithium soars as China to revoke battery export tax rebates. Jan 12, 2026.