In the meantime, stocks in the NEV industry chain in China's A-share market soared, with Gotion High-tech up 7.26 percent and CATL up 4.86 percent.

China's electric vehicle (EV) trio - Nio (NYSE: NIO, HKG: 9866, SGX: Nio), Xpeng Motors (NYSE: XPEV, HKG: 9868), Li Auto (NASDAQ: LI, HKG: 2015) - fell in Hong Kong as the overall market moved lower.

At press time, Nio was down 5.84 percent to HK$162.8, Xpeng was down 1.68 percent to HK$122.9 and Li Auto was down 2 percent to HK$152.2.

Hong Kong's Hang Seng Index was down 0.84 percent and the Hang Seng Tech Index was down 1.96 percent.

The performance followed that of the US stock market overnight. By Wednesday's close, Nio was down 6.09 percent in the US, Xpeng was down 4.33 percent and Li Auto was down 3.5 percent.

In stark contrast to the performance of the Hong Kong market, the Chinese A-share market rose in early trading, with the NEV industry chain leading the gains.

As of writing, an ETF tracking the NEV sector was up 1.86 percent, Gotion High-tech was up 7.26 percent, Contemporary Amperex Technology Co Ltd (CATL, SHE: 300750) was up 4.86 percent and JAC was up 4.76 percent.

At the macroeconomic level, China's new Covid cases have increased recently, impacting investor sentiment to some extent.

On July 6, China added 94 new confirmed cases of Covid as well as 244 asymptomatic infections, according to health authorities.

Anhui added 39 confirmed cases and 128 asymptomatic infections yesterday, while Shanghai added 32 confirmed cases and 22 asymptomatic infections.

Optimism among investors in the A-share market about the NEV industry chain appears to be driven by new support policies announced earlier today.

Seventeen government departments, including China's Ministry of Commerce, issued a notice today, which mentioned that they support NEV consumption and will study the extension of the vehicle purchase tax exemption for NEVs after it expires.

This means that China's supportive policies for the auto industry, especially NEVs, are starting to enter the implementation phase after a high-level meeting in China late last month.

In specific company news, Nio held its second annual Nio Power Day event yesterday, unveiling the company's latest plans for building complementary energy facilities.

The company announced 500-kW ultra-fast charging piles and previewed its third-generation swap station.

There has been no news about Xpeng recently, but Shenzhen announced new rules yesterday that makes it the first Chinese city to allow L3 autonomous driving.

Commenting on the news on Weibo, Xpeng Chairman and CEO He Xiaopeng said it would be a milestone worth noting in the history of autonomous driving in China.

On June 27, top Chinese investment bank CICC said in a research note that the market is not currently fully cognizant of the pace and experience of mass production of Xpeng's City NGP feature, saying that updates on the feature's progress are expected to be a central catalyst for its share price to rise.