XIAOMI Corp. has won the approval of China’s top economic planner to manufacture electric vehicles (EVs), said sources with knowledge of the matter, marking a major step toward the smartphone maker’s goal of producing cars by early next year.

The National Development and Reform Commission (NDRC), which regulates new investments and production capacity in China’s auto industry, gave the nod for EV manufacturing to Beijing-based Xiaomi earlier this month, said the sources. Xiaomi’s venture is only the fourth since end-2017 to win NDRC approval.

While NDRC’s nod brings Xiaomi closer to mass production of EVs more than two years after it first announced the plans, the venture still needs clearance from the Ministry of Industry and Information (MIIT), which assesses new automakers and models for technical and safety requirements.

Xiaomi would be entering China’s car manufacturing sector at a time when the world’s largest auto market is wrestling with a series of issues, including a capacity glut and slowing demand that have stoked a bruising price war and hit supplier margins.

Xiaomi had pledged a US$10 billion investment over a decade in the automobile business and set a goal of mass producing its first cars in the first half of 2024.

But there were doubts if the timeline could be met as the NDRC has been cautious in approving new EV production plans of companies because of concerns on overcapacity and slowing demand in the sector.

Tesla Inc.’s plan to expand its Shanghai plant had yet to win the nod to go ahead, Reuters reported in June. And industry sources have previously said U.S. luxury EV maker Lucid Group is keen to make cars in China but has been advised that the possibility was low.

Xiaomi’s EV plant has been marked by the Beijing city government as an important industrial upgrade project. (SD-Agencies)