The European Commission will investigate China's state subsidies for manufacturers of electric vehicles, which it suspects keep down prices of the vehicles sold in the bloc.

Commission President Ursula von der Leyen announced the decision in her State of the Union address to the European Parliament on Wednesday.

She said global markets are flooded with cheaper Chinese EVs, and their price is kept artificially low by huge state subsidies. She said the practice is distorting the European Union market.

Should the probe find that Europe's auto industry is being harmed by heavily state-subsidized imports, it could lead to the imposition of tariffs on Chinese EV imports.

Von der Leyen referred to what she called China's unfair trade practices that affected Europe's solar industry in the past.

The EU in 2013 provisionally imposed punitive tariffs on Chinese solar panels, maintaining that they were unfairly priced. The restriction was later lifted.

It appears she has set her sights on taking similar action.

At the same time, von der Leyen has attached importance to maintaining dialogue with China, saying she will approach the Chinese leadership at an EU-China summit later this year.

The announcement comes after the European Automobile Manufacturers' Association in August claimed that "China has its gaze set on the European market, with the potential to fundamentally change the face of Europe's industries as we know it."