Smartphone maker Xiaomi Corp is in talks with Beijing Automotive Group Co to collaborate on producing electric vehicles (EV).

The two companies are exploring different options including Xiaomi buying a stake in Beijing Hyundai No. 2 plant, which has a license to make cars in China, the report said.

Last year, Xiaomi said it would enter the competitive EV sector and challenge established brands and newer tech companies.

The company committed to bringing its cars to mass production in the first half of 2024. Earlier this year, the company started construction on its first auto factory in Beijing.

Xiaomi is eyeing a production tie-up as it faces delays in acquiring a license to make cars on its own.

The collaboration could see vehicles built by Beijing Automotive's EV brand, BAIC BluePark New Energy Technology Co, and co-branded with Xiaomi, the report said.

Xiaomi and BAIC declined to comment, while Hyundai did not immediately respond to a Reuters request for comment.

Beijing Hyundai, the joint venture between Hyundai Motor Co and BAIC, has three manufacturing plants in Beijing.