China has agreed with the EU to “halve” its sales of hybrid cars in the bloc in a landmark deal that is aimed at staving off the demise of parts of the European car industry, reports The Guardian.

Trade commissioner Maroš Šefčovič said the deal came after “intense” negotiations with China that have been underway since June in an effort to reduce a ballooning EU trade deficit of €1.18 billion ($1.32 billion) a day, which has caused mounting tensions between the two economic powers.

The deal “opens the prospect of cutting China’s export [of hybrids] by more than a half”, Šefčovič said at a press conference in Beijing on October 9. He added that this would translate into a reduction in exports of plug-in and battery-powered hybrid cars by “several millions” over the next four years, The Guardian reported.

“It is the first time that China has accepted to moderate its exports without going through the phase of prior trade tension,” he said, a reference to the usual investigations that must take place before safeguards under WTO trading rules are put in place.

Read More: Chinese EV Sales Surge to Record Highs in Western Europe 

Sales of Chinese cars, particularly hybrids and pure battery electric vehicles (BEVs) have risen sharply in the last few years, with the low prices presenting a threat to European automakers. 

China and the EU have acknowledged “differences” between them on trade, but it appears that China views positively the EU’s request to create a new model for trade balances starting with this pilot on hybrid cars.