Chinese vendor Xiaomi is reportedly in talks with Beijing Automotive Group Co (BAIC) to support its plan to enter the smart electric vehicle (EV) sector.

Bloomberg reported the vendor is exploring a tie-up with BAIC on the potential production of co-branded EVs. Reports suggest this is because the smartphone maker faces delays in acquiring a licence in China to make cars on its own.

Options under discussion are said to include Xiaomi buying a stake in Beijing Hyundai No. 2 plant, which has a licence to make cars in China. Beijing Hyundai Motor is a 50-50 joint venture between the South Korean automaker and BAIC Motor Corp.

Xiaomi CEO Lei Jun recently detailed Xiaomi’s aim to become a leader in the EV sector during 2024, a segment it only announced its entry into in March 2021 when it revealed it would spend CNY10 billion on it in the following ten years.

Reuters noted that Xiaomi started construction on its first car factory in Beijing earlier this year, with an expected annual capacity of 300,000 units.

The vendor is eyeing the EV sector as it encounters more challenges in its traditional smartphone business. In Q2, widespread Covid-19 (coronavirus) restrictions slowed demand for smartphones across the country and hit Xiaomi’s bottom line.