EV battery leaseback project formed to lower EV prices

Industry

Published: 18 Feb. 2021, 16:02

EV battery leaseback project formed to lower EV prices

Korean Prime Minister Chung Sye-kyun, left, and Hyundai Motor Group Chairman Euisun Chung pose for photo inside the yet-to-be-launched Ioniq 5 at the carmaker's Namyang R&D Center in Gyeonggi on Thursday. [HYUNDAI MOTOR GROUP]

Hyundai Motor and LG Energy Solution will work together on a pilot electric vehicle (EV) battery-leasing business project.

Hyundai Motor, LG Energy Solution, Hyundai Glovis, taxi operator KST Mobility and the ministry of industry on Thursday signed a memorandum of understanding (MOU) outlining the cooperation.

KST Mobility, which operates a taxi fleet in Korea, will purchase Kona Electrics from Hyundai Motor and sell the ownership of the installed battery to Hyundai Glovis, which will oversee the battery rental business. KST will then pay a monthly fee to Glovis to use the battery.

As the cost of the battery is about 40 percent of the EV price, the rental system is expected to lower the price not only for taxi operator but also for ordinary customers once the pilot project is expanded.

Once the battery reaches the end of its life, LG Energy Solution will acquire the used batteries from Glovis to develop them into energy storage systems (ESS). The ESS units will be then sold back to KST Mobility to be used as an alternative charging source alongside ordinary chargers.

The ESS units may be a more economic for charging, Hyundai Motor explains, because they can be charged at night when electricity prices are lower and be used during daytime when the price goes up.

KST Mobility will share collected data from operating an EV taxi fleet and ESS charging system with other participants in the MOU.

“If the battery rental business gets more commercialized, customers can purchase EVs at a cheaper price because they can purchase the EV minus the battery price and then can just pay rental fee for the battery usage,” Hyundai Motor said in a statement. “It will lead to the sale of more EVs.”

Until now, used batteries for EVs had to be surrendered to local governments for safety reasons, but that process was recently abandoned in the face of the rapid growth in EV demand, leading to more discarded batteries.

Hyundai Motor is one of the active participants in utilizing old batteries. In January, it initiated another pilot project to use discarded batteries in ESS units, using solar energy. It plans to operate a 2 megawatt-hour (MWh) ESS at its Ulsan factory powered by solar energy, which is able to supply enough electricity for five four-member households to live on for more than a month.

Korean Prime Minister Chung Sye-kyun, fourth from left, and Hyundai Motor Group Chairman Euisun Chung, fifth from left, at the carmaker's Namyang R&D Center in Gyeonggi on Thursday where a memorandum of understanding on electric vehicle battery lease pilot program was signed. [HYUNDAI MOTOR GROUP]

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]