The European Commission has launched an investigation into whether to impose punitive tariffs to protect European Union auto manufacturers against cheaper Chinese electric vehicle (EV) imports it says are benefiting from state subsidies.

"Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies," European Commission President Ursula von der Leyen (pictured) said in her annual address to the bloc's parliament..

The Commission will have up to 13 months to assess whether to impose tariffs above the standard 10% EU rate for cars.

The anti-subsidy investigation covers battery-powered cars from China, so also includes non-Chinese brands made there, such as Tesla, Renault and BMW.

The Chinese Chamber of Commerce to the EU said it was very concerned and opposed to the investigation's launch and that the sector's competitive advantage was not due to subsidies. It urged the EU to look at Chinese electric vehicles objectively.

The European Commission said China's share of EVs sold in Europe has risen to 8% and could reach 15% in 2025, noting prices are typically 20% below EU-made models.