Is China Loosening It's Grip On LFP Technology Controls?

CATL, the world's biggest battery maker is betting big on sodium-ion. China is taxing lithium-ion at home. Neither of those things means China is about to allow the hand over its most valuable battery know-how just yet. China's export controls on lithium iron phosphate (LFP) technology come with an expiry date, but don't expect that dater to arrive anytime soon. CATL itself expects sodium-ion batteries to eventually claim 30-40% of the market it currently serves with LFP, and multiple industry forecasts now put sodium-ion's share of new stationary storage and entry-level EV cells above 60% by 2028. Solid-state cells are creeping toward small-scale vehicle production around 2027. If LFP is a maturing, soon-to-be-secondary chemistry, why would Beijing keep guarding manufacturing know-how for it as tightly as it guards its genuine frontier technology? The reporting on what China has actually done with these controls over the past year suggests the opposite conclusion: Beijing is managing LFP's decline on its own terms, not giving up on it. What actually got relaxed — and why The controls are not one policy but a layered stack, and it matters which layer moved. In July 2023 and again in July 2025, China required export licenses for LFP cathode preparation technology, tightening the July 2025 round to cover fourth-generation LFP cathode know-how specifically — the newest, most cost-competitive version of the chemistry. On October 9, 2025, Beijing added a far broader dual-use package: licenses for lithium-ion batteries above 300 Wh/kg, high-density LFP cathode materials, nickel-cobalt precursor materials, and the equipment used to manufacture all of it. Three weeks later, at the Trump-Xi summit in Busan, the third-generation LFP restriction was dropped as part of the broader trade truce. In November 2025, China went further and suspended the entire October 9 package — batteries, materials, equipment — through November 10, 2026. On the surface, that looks like exactly the relaxation the sodium-ion logic would predict. Look closer, though, and the fourth-generation LFP cathode technology license, arguably the piece that matters most, since it determines whether CATL's own European gigafactories can run best-in-class chemistry or stay capped on third-generation output was not part of that suspension. As of the most recent tracking, it remains in force. What eased was the newer, broader package tied to an active trade negotiation; what stayed was the older, narrower control tied to who gets to build competitive LFP capacity outside China. A tax policy that tells the real story The clearer signal of Beijing's actual thinking arrived in July 2026, and it has nothing to do with export licenses. China's finance ministry announced a domestic consumption tax on lithium-ion batteries — 2% from September 1, 2026, rising to 4% from September 2027, while explicitly exempting sodium-ion batteries, solid-state batteries and fuel cells through the end of 2028. Next generation PV cells got a parallel treatment: perovskite, tandem and gallium arsenide cells exempted, conventional silicon cells taxed from 2027. If China genuinely viewed LFP as a depreciating strategic asset, easing its export controls would be the coherent move to pair with that tax. Instead, Beijing is doing the opposite in each direction at once: discouraging lithium-ion production at home through price signals, while keeping its most advanced LFP manufacturing technology licensed and therefore controllable, for export. It clearly wants to milk LFP for all it's worth for now, on its own schedule, while quietly redirecting domestic capital toward the chemistries it wants to dominate next. What it means for India For India, on the LFP side, projects like the Tata-owned Agratas's cell manufacturing build-out in Gujarat remain dependent, directly or indirectly, on technology and equipment where China's fourth-generation licensing regime still applies — meaning Indian LFP capacity is likely to stay at least one generation behind China's own production for as long as that control holds, trade-truce headlines notwithstanding. On the sodium-ion side, the tax exemption is arguably the more consequential fact for India's own bets, including Reliance's Faradion. It signals Chinese capital and manufacturing capacity rotating toward sodium-ion faster than the export-control conversation alone would suggest, not because Beijing is loosening its hold on battery technology, but because it has already decided where the next hold needs to be built. India's storage sector should plan for Chinese competition in sodium-ion arriving on a shorter timeline than LFP's own history would suggest, not a longer one. That is, if we get there in due course at all.