European Union and U.S. officials expect to reach agreement that would grant EU companies, including electric car makers, the same status as U.S. ones in the U.S. market, to avoid what the EU calls discrimination against its producers by the U.S. Inflation Reduction Act.

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The EU says that while it allows government tax breaks or subsidies for purchases of U.S. electric cars such as those made by Tesla, the United States makes such support conditional on the car, or parts of it, being made in the United States.

European Commission Vice President Valdis Dombrovskis, responsible for trade, is holding talks on Thursday and Friday with U.S. Trade Representative Katherine Tai, Commerce Secretary Gina Raimondo and Treasury Secretary Janet Yellen on the issue.

"Last month Tesla model Y was the most sold car in Germany," Dombrovskis told a news briefing.

"That would not have been possible without the un-discriminatory EU subsidy, while EU electric cars do not get a similar subsidy in the U.S., which is discrimination that we want to address," Dombrovskis said.

EU car makers - like Volkswagen - are affected by the U.S. legislation, which covers a host of other products.