The European Commission has outlined conditions under which China-based electric vehicle makers could replace tariffs with minimum price commitments, reported Reuters.

The commission said it would also consider Chinese EV investments in Europe. Tariffs of up to 35.3 per cent are currently the biggest source of trade tensions between Beijing and Brussels.

The EU is seeking to protect its auto industry from cheaper imports produced by companies such as BYD and Geely. China favours minimum price commitments as an alternative to duties.

Following talks with the Chinese commerce ministry, the commission issued written guidance on how minimum price offers could replace tariffs. It stressed that any prices must offset subsidies, have an effect equivalent to duties, be workable and minimise cross-compensation