By Philip Blenkinsop and Kate Abnett

BRUSSELS (Reuters) -Tesla is set to get a reduced tariff on its China-built cars exported to the European Union after the bloc’s executive revised on Tuesday its proposed punitive duties on imports of Chinese-made electric vehicles.

The revisions are part of draft findings issued by the European Commission in the highest profile EU investigation of alleged Chinese subsidies, which has provoked threats of retaliation from Beijing.

The Commission, which oversees the bloc’s trade policy, says the proposed tariffs are needed to level the playing field and counter what it says are unfair subsidies.

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

The tariffs are on top of the EU’s standard 10% duty on car imports.

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

It said it still believed Chinese EV production had benefited from extensive subsidies and proposed final duties of up to 36.3%. That is slightly lower than the maximum provisional duty of 37.6% it set in July for companies that did not cooperate with the EU’s anti-subsidy investigation.

Tesla was among the companies classed as cooperating with the EU investigation.

The Commission said the three companies it had sampled would each receive slightly lower provisional duties. For Chinese electric vehicle giant BYD, it said the rate was 17.0%, Geely 19.3% and SAIC 36.3%.

In July, the Commission set provisional duties of between 17.4% and 37.6%. For BYD the additional rate was 17.4%, Geely 19.9% and SAIC 37.6%.

Chinese companies in joint ventures with EU producers may also be eligible for the lower duty rates planned for the Chinese company in which they are integrated – as opposed to automatically receiving the highest tariff rate, the Commission said.

INVESTIGATION ONGOING

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

Interested parties have until Aug. 30 to submit their comments on the Commission’s findings.

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

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

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 Oct. 30. They typically apply for five years.

Until then, Brussels and Beijing could still thrash out a compromise to avert or soften tariffs. China has in the meantime launched a challenge at the World Trade Organization.

The Commission has estimated Chinese brands’ share of the EUmarket has risen to 8% from below 1% in 2019 and could reach 15%in 2025. It says prices are typically 20% below those of EU-mademodels.

(Reporting by Philip Blenkinsop, Kate Abnett, Sudip Kar-Gupta, Benoit Van Overstraeten; editing by Emelia Sithole-Matarise)

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