EU changes its punitive duties on imports of Chinese-made EVs, including those made in joint ventures with EU firms.

The European Union has slashed its planned extra tariff on Tesla electric vehicles (EVs) imported from China by more than half, the bloc’s executive says, after further investigations requested by the company.

The European Commission, which made its comments on Tuesday, also revised its proposed punitive duties on imports of Chinese-made EVs in draft findings in the highest-profile EU investigation of alleged Chinese subsidies, which has provoked threats of retaliation from Beijing.

It set a new reduced extra rate of 9 percent for Tesla, lower than the 20.8 percent it had indicated in July, and said some Chinese companies in joint ventures with EU automakers may also receive lower planned punitive duties on Chinese-made EV imports.

The tariffs are on top of the EU’s standard 10 percent duty on car imports, a measure the commission said is aimed at levelling the playing field and countering what it called unfair subsidies.

Tesla had requested a recalculation of its rate to be based on the specific subsidies the company had received. The commission said on Tuesday that it had verified that Tesla received fewer subsidies from the Chinese government compared with the country’s EV makers, which Brussels had investigated.

The commission, which sets EU trade policy, said it still believed Chinese EV production has benefitted from extensive subsidies and proposed duties on other companies of up to 36.3 percent – slightly lower than the maximum initial planned duty of 37.6 percent set in July for companies that did not cooperate with the EU’s antisubsidy investigation.

China’s Ministry of Commerce said it is “firmly opposed to and highly concerned” about the findings and promised to take all necessary measures to protect Chinese firms.

The draft findings were based on “facts unilaterally determined by the EU side, not on facts mutually agreed upon”, the ministry said in a statement.

China hopes the EU will expedite the exploration of other solutions and take practical actions to avoid the escalation of trade frictions, it added.

Beijing launched a challenge of the EU tariffs at the World Trade Organization this month.

Lower duties

Tesla was among the companies classed as cooperating with the EU investigation. It did not respond to a request for comment on Tuesday from the Reuters news agency.

The commission said three companies it had sampled would each receive slightly lower provisional duties than indicated in July. China’s BYD would face a rate of 17 percent, down from 17.4 percent levied in July. Geely’s tariff would be 19.3 percent vs 19.9 percent and SAIC 36.3 percent, down from 37.6 percent.

Chinese firms in joint ventures with EU producers may also be eligible for the lower duties planned for the Chinese companies in which they are integrated, the commission said.

Volkswagen’s subsidiary was now expecting to receive a lower tariff of 21.3 percent on its Cupra Tavascan, which is produced by a joint venture in China that is majority-owned by the German automaker, a source close to the matter told Reuters.

A spokesperson for SEAT, a Volkswagen subsidiary, said it was working with the VW Group to further reduce the impact of the tariffs.

BMW said in a statement its joint venture in China, which produces the electric Mini, was also classed as a “cooperating company”, qualifying it for a lower duty of 21.3 percent vs the 37.6 percent Brussels had indicated last month.

The planned tariffs could become the EU’s final measure on Chinese-made EVs once its investigation is concluded in about two months.

Interested parties have until August 30 to submit comments on the commission’s findings.

The proposed final duties will be subject to a vote by the EU’s 27 states. They will be implemented unless a qualified majority of 15 EU members, representing 65 percent of the EU population, vote against them.

It is a high hurdle that is rarely reached although this is a politically charged issue.

In an advisory vote in July, 12 EU members supported the provisional tariffs, four voted against and 11 abstained, sources said.

Definitive duties would have to apply by October 30.