After China's first pollution "red alert" this week, the government is regulating the number of cars on roads. But there are no restrictions on electric vehicles. This could prove to be a boost for an already booming electric car industry, as China is already poised to overtake the United States at the largest market for electric cars.

Video Transcript:

It's a familiar sight over Beijing.

And on Tuesday came China's first pollution red alert.

The government responded by restricting the number of cars on the road.

That was good news for the electric car industry.

Some dealers say interest has increased by almost a tenth.

Li Jun runs BYD dealership.

"As soon as the red alert was announced, limits were placed on cars with even number plates one day odd the next. Some construction projects had to halt operations and public bus services were stopped. But there were no restrictions on electric cars."

Beijing's Smog Problem
Vehicles using lights travel on a bridge amid heavy smog after the city issued its first ever "red alert" for air pollution, in Beijing, China, December 8, 2015. REUTERS/Kim Kyung-Hoon

Electric cars are also heavily subsidised, and that's lead to a near five-fold increase in sales.

114,000 were sold nationwide in the first 10 months of this year.

And China is on track to overtake the US as the largest market for electric cars.

Wang Cheng is a business man in Beijing.

"I'm considering buying one because right now Beijing is formulating a new policy for smoggy days. And there are no limitations on electric cars."

Automakers can't be certain the increase in inquiries will translate into sales.

And even if they do it may not solve the problem.

China relies on coal for around 75 percent of its power and the electricity used to recharge the batteries of electric cars is also coal-generated.

Electric cars China