The European Union has decided to significantly reduce the proposed tariffs on electric vehicles produced by Tesla in China, as well as on other Chinese companies.

In a recent announcement, the European Union revealed that it will reduce tariffs on Tesla vehicles imported from China to 9%, down from the previously planned 20.8%. This adjustment also applies to other electric vehicle manufacturers. Initially, in June, the EU had decided to impose higher tariffs on Chinese electric vehicle imports, citing significant subsidies that they believed unfairly benefited these vehicles and posed a risk to European EV producers.

The European Commission, which is the EU’s executive branch, concluded that the Chinese battery-electric vehicle industry benefits from unfair subsidies. As a result, they proposed provisional countervailing duties on these imports. On Tuesday, the Commission shared a draft decision to implement definitive countervailing duties on Chinese BEVs.

After reviewing feedback from various stakeholders, the EU decided to slightly adjust the proposed tariff rates. Consequently, Tesla’s China-made electric vehicles will now face a 9% import duty in the EU, a reduction from the previously indicated 20.8%. This decision followed a detailed request from Tesla to reassess the tariffs based on the specific subsidies it receives in China. Following this news, Tesla’s shares saw a slight increase of over 1% in U.S. morning trading.

The EU granted Tesla a reduced individual duty rate as an exporter from China. Other Chinese EV manufacturers also saw slight reductions in their tariff rates: BYD’s rate was lowered from 17.4% to 17%, Geely’s from 19.9% to 19.3%, and SAIC’s from 37.6% to 36.3%. These companies did not immediately respond to requests for comments.

Companies that cooperated with the EU’s investigation into China’s EV subsidies will face a 21.3% tariff, which is higher than the 20.8% initially proposed in July. Non-cooperating companies will be subject to a 36.3% import duty, down from the previously planned 37.6%.

— This article includes contributions from CNBC’s Sophie Kiderlin.