By Belén Carreño

MADRID (Reuters) – The European Union should seek a compromise and negotiated outcome with China, Spain said on Thursday, on the eve of a crucial EU vote on electric vehicle (EV) tariffs.

Instead of imposing tariffs, the EU should “keep negotiations open … beyond the binding vote” to strike a deal on prices as well as the relocation of battery production to the bloc, Economy Minister Carlos Cuerpo said in a letter to the European Commission Vice President Valdis Dombrovskis seen by Reuters.

“There is a lot at stake for our domestic industry,” Cuerpo wrote, noting that Spain is the EU’s second-largest car producer.

“We need to strike the right balance, technically and politically, to ensure that we both defend our industrial interests, and avoid a large-scale confrontation with strategic players such as China,” Cuerpo added.

Prime Minister Pedro Sanchez said last month during a visit to China that the EU should reconsider its position on tariffs , and urged Brussels and Beijing to avoid a trade war.

The Commission’s proposal can be implemented unless a qualified majority of 15 EU members, representing 65% of the EU population vote against it, a high hurdle.

Reuters reported on Wednesday that France, Greece, Italy and Poland will vote in favour, which would be enough to push through the EU’s highest profile trade measures. Germany plans to vote against, sources said on Thursday.

Volkswagen (ETR:) and Renault (EPA:) are among the carmarkers already producing EVs in Spain, while China’s Chery Auto has signed a joint venture deal with Spain’s EV Motors to produce cars at its first factory in Europe.