Hyundai is going to lease out batteries to reduce cost of Electric Vehicles

Hyundai Motor is looking to accelerate the adoption of electric vehicles by making owning an electric vehicle more affordable by leasing out the battery, rather than letting it figure in the sticker price.

Their test client is going to be KST Mobility, a South Korean taxi firm. The deal involved the country’s Ministry of Trade, Industry and Energy, Hyundai Glovis (Hyundai’s logistics’ subsidiary) and battery maker LG Energy Solution.

Hyundai is establishing a battery rental business that would supply batteries to electric vehicles used as taxis and later retrieve the batteries for reuse in energy storage systems (ESS). The ESS will be used to power fast charging stations for the same taxis. The ESS will be charged during electricity off-peak periods to reduce costs.

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Under this unique deal, Hyundai will buy the batteries in KST Mobility’s just purchased electric taxis and lease it back to KST. This means KST is slashing the upfront costs of the vehicles and will pay monthly rental fees going forward. The project is kicking off with 20 Kona models. Hyundai will provide battery warranty and replacement batteries.

For its part, LG Energy Solution will monitor the safety and residual value of the batteries at the end of the lease. The company will also handle the installation of the battery in the ESS. All parties in the agreement will have access to the data gathered by LG.

The Korean government is making moves to extend the electric vehicle tax break scheme that is supposed to end this year.

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Prime Minister Chung remarked “Green cars will become more popularized from this year and the government will support innovations based on supply and demand to help Korean companies cement their lead in the global market”

The joint venture will explore other new business opportunities around battery leasing.

Hyundai had earlier signed a Business Cooperation Agreement (BCA) in Singapore with SP Group to fast-track the adoption of electric vehicles. The company’s Indian subsidiary also signed an MOU with Foundation for Innovation and Technology Transfer in Delhi to support students studying sustainably fueled vehicle systems.

Written by D.O. for