For example, Shanghai, Tianjin, Hangzhou, capital of Zhejiang province, Guangzhou, the Guangdong provincial capital, and Shenzhen are issuing a total of 165,000 additional vehicle license plates this year.

Speaking at an event on June 18, Guo Shougang, a deputy director at the Ministry of Industry and Information Technology, said vehicle production in China has returned to normal.

Tesla said its plant in Shanghai, which was hit hard by COVID-19 earlier this year, returned to 100 percent capacity in the second week of last month. The factory resumed production in late April with help from the local authorities.

Lu Jiamin, an automotive analyst at Cinda Securities, said the auto market is expected to gain further momentum in coming months due to resumed production, pent-up demand earlier this year, and government financial stimulus measures.

NEVs retail sales hit a monthly record of 532,000 units in June, according to the China Passenger Car Association, or CPCA.

Nasdaq-listed Nio, which saw its monthly deliveries rebound to more than 10,000 vehicles, said production and deliveries returned to normal last month.

Four startups, including Xpeng and Nezha, each sold more than 10,000 vehicles last month. In the first five months of this year, NEV sales in China reached 1.89 million, a rise of 117 percent year-on-year and accounting for 59 percent of the global total, according to the CPCA.

Cui Dongshu, secretary-general of the CPCA, said: "Passenger vehicle sales last month reached 1.94 million, up 22.6 percent from the same month last year. We are seeing the results of the stimulus measures, which are better than expected. These results will be even more noticeable in the fourth quarter."

He expects the favorable policies to increase vehicle sales this year by an additional 2 million, taking total passenger vehicle sales in China to 21 million, up by 4 percent from last year.

Zhang Xiang, a researcher at the Automobile Industry Innovation Research Center at North China University of Technology in Beijing, said attempts to spur car sales will bolster market confidence and inject strong impetus into the market.

Sales of NEVs are mainly focused on first- and second-tier cities, but there is plenty of room for growth in lower-tier cities, townships and rural areas, Zhang Xiang added.