TMTPost -- The European Union is tweaking the provisional tariff rates on China-made electric vehicles (EVs) that two German auto giants face, according to a report.

Credit：Xinhua News Agency

The European Commission has indicated to BMW and Volkswagen that it may consider cutting tariffs on two companies’imports of China-made EVs, Reuters cited sources with knowledge of the matter. The executive arm of the European Union was willing to classify the two automakers as cooperating firms, which means they are qualified for a 20.8% tariff on their China-made models, instead of a tariff of 37.6% under current plans, according to the sources.

If the adjustment of individual tariffs comes true, it would a first, early compromise by the EU on tariffs as some of top auto companies in Europe make cars in China and import them to the region.

The European Commission announced on July 4 it imposed provisional countervailing duties of up to 37.6%, on top of the ordinary BEV import duty of 10%, on imports of battery electric vehicles (BEVs) from China. The commission concluded through an anti-subsidy investigation that the BEV value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV producers.

Specifically,the additional individual duties on three sampled Chinese EV makers, would be 17.4% for BYD, 19.9% for Geely and 37.6% for SAIC. That means the EU decided to levy a little bit less duties on Geely and SAIC-made EVs since its pre-disclosed proposed rates are 20% and 38.1%, respectively, while BYD, China’s largest EV manufacturer, faces the same tariff rate as EU’s original proposaldisclosed on June 12.

According to a statementof the European Commission , other BEV producers in China, which cooperated in the investigation but have not been sampled, are subject to the 20.8% weighted average duty, marginally downgraded from the Commission’s original proposed21%, while all other BEV producers in China that did not cooperate in the investigationface an extra duty of 37.6%, compared with the original proposed 38.1%.

The European Commission suggested the long-term definitive duties will be effective no later than four months ago, if approved by EU countries. All the abovementioned provisional duties are applied for a maximum duration of four months starting from July 5. Within the four-month timeframe, a final decision must be taken on definitive duties, through a vote by EU Member States, and when adopted, this decision would make the duties definitive for a period of five years, the Commission said.

BMW's China-made electric Mini and Volkswagen's Cupra Tavascanwere not part of Brussels' sample analysis in the run-up to the tariff announcement, making they automatically targets of the highest tariff level.

BMW was reported last week to have asked Brussels to recalculate individual tariff rate to lower such levies for imports of its China-made electric Mini to Europeas the full-electric Mini now face the highest duties under provisional EU regulation. BMW aimsto cut the duty levels to 20.8%, down from 37.6%, according to a Reuters report. The report quoted sources that BMW expects the electric Mini will ultimately be subject to a lower tariff, and an official process for new market entrants to seek lower duties would only be made possible in the fall, once final duties have been set.