An agreement between European Union authorities and US authorities could allow European electric vehicles to receive the same federal tax breaks as domestically produced electric vehicles in North America.

President Biden Law on reducing inflation ruffled feathers throughout the auto industry. It stipulates that electric vehicles must be built in North America to receive the $7,500 tax credit, and that they must have batteries made from at least 40 percent materials sourced in North America or from a U.S. trading partner.

European Commission Vice President Valdis Dombrovskis recently held talks with US Trade Representative Catherine Tye, Commerce Secretary Gina Raimondo and Treasury Secretary Janet Yellen on the issue. Reuters reports. The European Union believes that the act exists discriminatory against its producers.

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“Last month, the Tesla Model Y was the best-selling car in Germany,” Dombrovskis said. “This would not be possible without a non-discriminatory EU subsidy, while EU electric cars do not receive a similar subsidy in the US, which is the discrimination we want to address.”

Dombrovskis seems optimistic that an agreement between the EU and the US can be reached.

“There is a desire on the part of the United States to participate in this,” he added. “We hope we can resolve these issues before they become disputes.”

It remains unclear what concessions might be made to European Union carmakers, but U.S. Trade Representative Catherine Tye believes a deal will be reached.

“Based on the strength of the EU-US relationship, I am quite confident that we will be able to handle this,” she said.

The European Union is not alone in expressing concern about the Inflation Reduction Act. South Korean officials are equally frustrated with the policy and have also been in discussions with US officials to ensure that their electric vehicles are also eligible for tax breaks.