The local traffic authority will issue the city's first free set of license plates for an electric vehicle later this week, local media reported Sunday.

The Shanghai municipal government has offered the free plates as an incentive to buy electric vehicles as the price of license plate registration in the city continues to rise, hitting a new record high over the weekend.

The lowest winning bid for a regular set of plates reached 75,000 yuan ($12,067) at the first auction of this year, up 6,100 yuan from last month, according to a report in the Shanghai Morning Post.

Free license plates is one measure in the municipal government's new incentive policy for electric vehicles, which took effect on December 28. The policy provides subsidies of up to 40,000 yuan for electric vehicles and 30,000 yuan for plug-in hybrids. The city's measure augments central government subsidies of up to 60,000 yuan for electric vehicles and 50,000 yuan for plug-in hybrids.

The city has set aside 20,000 sets of license plates for new energy vehicles this year, a government official told China Business News.

Currently, SAIC Motor's Roewe E50 is the only electric vehicle that qualifies for free license plates under the policy, according to a saleswoman from Shanghai Gaozhan New Energy Vehicle Sales Services Co, a car dealership devoted to electric and hybrid vehicles.

The Shanghai-based SAIC Motor Passenger Vehicle Co Ltd began selling the Roewe E50 on November 5. The purely electric vehicle has a list price of 234,900 yuan.

The car is eligible for a 54,000 yuan central government subsidy and a 40,000 yuan subsidy from the municipal government, bringing the price down to less than 140,000 yuan, the saleswoman told a Global Times reporter posing as a potential customer.

To qualify for the subsidy, a buyer must have Shanghai household registration or another kind of residence permit, as well as a parking spot registered in his or her name, the saleswoman said. Because charging stations are scarce in the city, an electric car owner can apply to the Shanghai Municipal Electric Power Company to have a charging pole installed next to his or her parking spot.

Gaozhan has sold 230 electric vehicles since the municipal subsidies were announced, company founder Xu Weihan told Dragon TV.

Although the government offers high subsidies, some are skeptical of their effectiveness.

"Compared with normal cars, electric cars are still in the very early stages of development. They are less reliable. Most people are unfamiliar with them. What if the car runs out of power halfway to your destination and you do not know how to deal with it?" Chen Wenkai, president of Gasgoo.com, an auto information website, told the Global Times in a previous interview.

Shanghai has 12 charging stations and 890 charging poles citywide, according to a report in the Shanghai Evening Post. The local government plans to install a total of 50 charging stations and 5,000 charging poles by 2015.