Chinese smartphone maker Xiaomi is building its first electric vehicle factory in the outskirts of Beijing, according to a local government announcement, marking an important step for the firm as it vies for a slice of China’s booming EV market. The Beijing-based company inked a deal on Saturday with the committee of the Beijing Economic-Technological Development Area to land its car project in Yizhuang, a suburb southeast of the Chinese capital, the local government said in a WeChat post. Xiaomi founder and CEO Lei Jun, as well as company president Wang Xiang, were present at the contract-signing ceremony, along with government officials. Xiaomi’s first electric car won’t be a budget vehicle Under the agreement, Xiaomi’s car factory will be constructed in two phases, each designed to have an annual production capacity of 150,000 units. Its first vehicle is expected to hit the road in 2024. The project also includes the headquarters of Xiaomi’s car business, as well as a sales centre and an R&D centre. The company did not disclose how much money it is spending on the construction. Xiaomi, the world’s third largest smartphone vendor , announced in March its foray into the EV industry in China, joining other Chinese tech firms such as Huawei Technologies Co and Baidu in a big bet on the world’s largest automobile market. At the time, Xiaomi said it is investing US$10 billion on its EV project over the next 10 years. This summer, the company announced it was acquiring autonomous driving technology firm DeepMotion for US$77.4 million. Wang said earlier this week that the development of its car business is on track, with more than 500 employees recently hired for the project. Xiaomi faces daunting challenges in electric car foray The Yizhuang economic development zone is home to the facilities of a number of tech companies, including Baidu, e-commerce operator JD.com, and China’s top chip foundry Semiconductor International Manufacturing Corporation (SMIC). Baidu uses its testing facility there to trial autonomous vehicles. The government announcement on Saturday praised Xiaomi for epitomising “outstanding Chinese technology” and smart manufacturing, saying that the company’s project will help Beijing become an innovation centre for smart EVs, an area where China wants to take the global lead.