China's National Development and Reform Commission mandated strict NEV battery-included scrappage rules with a 2030 deadline for establishing a full closed-loop waste recycling system. Meanwhile, two departments are studying reforms to gasoline consumption tax. NEV retail penetration reached 65.1% in July.
Battery-Included Scrappage: Solving NEV Waste Recycling
On August 16, Wang Shancheng, Director of the NDRC's Department of Resource Conservation and Environmental Protection, announced at the 2026 National Ecological Day event that by 2030, China will establish a comprehensive closed-loop waste recycling management system for "new trio" products, strictly implementing NEV "battery-included scrappage" and cracking down on illegal recycling.
This policy addresses the growing battery recycling challenge behind China's rapid NEV growth:
- Surging retired batteries: Early NEVs are entering peak scrappage period, with battery retirement volumes expected to peak around 2028-2030
- Inconsistent recycling quality: Numerous informal dismantling channels currently operate with environmental and safety risks
- Insufficient resource recovery: Recovery rates for cobalt, nickel, and lithium need improvement
The "battery-included scrappage" requirement means future NEVs must have their batteries transferred to licensed recycling facilities upon scrapping, ensuring full lifecycle traceability.
Gasoline Consumption Tax Reform: ICE Cost Structure to Change
On August 17, the NDRC and National Energy Administration issued the "14th Five-Year Plan for Oil and Gas Development," explicitly stating they will "study and improve the refined oil consumption tax system and pricing mechanism."
This signals several important developments:
- Tax reform direction: Current consumption taxes are mainly collected at production; future reforms may shift to consumption endpoints or adjust rate structures
- Market-oriented pricing: Further alignment with international oil prices, reducing administrative intervention
- NEV substitution acceleration: Indirectly increasing ICE operating costs to speed up NEV adoption
National Bureau of Statistics data shows NEV retail penetration reached 65.1% in July, meaning approximately 2 out of every 3 passenger vehicles sold were new energy. January-July high-tech manufacturing investment grew 3.3%, with lithium battery manufacturing investment up 23.0%.
Industry Impact: Supply Chain Restructuring and New Rules
Combined, these two policies will profoundly reshape China's automotive industry:
| Policy Area | Immediate Impact | Medium-Long Term Effect |
|---|---|---|
| Battery-included scrappage | Mandatory battery recycling, regulated dismantling | Drives battery cascade utilization and materials recovery industries |
| Gasoline consumption tax | Potential increase in ICE operating costs | Accelerates NEV substitution, changes energy consumption structure |
Impact analysis for stakeholders:
- Automakers: Must establish or partner on battery recycling systems, increasing after-sales costs but gaining circular economy benefits
- Consumers: NEV residual values will incorporate battery recovery value, affecting used car pricing
- Recycling enterprises: Licensed dismantlers face growth opportunities, industry consolidation expected
- Energy companies: Refined oil tax adjustments will reshape industry profit distribution
The State Administration for Market Regulation simultaneously released five certification standards for automotive chips, building the world's first national-level capability evaluation system covering the entire automotive chip industry chain. This coordinated policy package signals China's automotive industry is transitioning from "scale expansion" to "quality improvement and regulated development." For more industry insights, visit EX1000.COM.
