In all honesty if you have a modern amount of RAM on your system, 500MB isn't that big.

That said, in the docs, it looks like you can do this:

use XML::CSV;

$default_obj_xs = Text::CSV_XS->new({quote_char => '"'});

$csv_obj = XML::CSV->new({csv_xs => $default_obj_xs}); 

$csv_obj->{column_headings} = \@arr_of_headings;

$csv_obj->{column_data} = \@arr_of_data;

$csv_obj->print_xml("out.xml");
[download]

Basically, notice that you can pass a Text::CSV_XS object to XML::CSV, which would allow you to read in $n lines of the CSV file, and then pass them in as an array to XML::CSV. This would be fairly trivial to do, but if you can't get it figured out, come back and we can help you through it.