- Hyundai signs MOU with South Korea’s Ministry of Trade, Industry and Energy as well as Hyundai Glovis, LG Energy Solution and KST Mobility
- Under MOU, all involved parties will explore a new innovative business model combining electric vehicle (EV) purchase with battery lease and battery reuse
Hyundai Motor Company today signed a memorandum of understanding (MOU) to work with the South Korean government as well as logistics, battery and mobility companies to demonstrate the electric vehicle (EV) battery leasing business.
Through this agreement, Hyundai aims to foster an EV ecosystem by alleviating the initial cost burden of EV purchases and providing innovative services that enable eco-friendly reuse of batteries.
Hyundai Motor signed the MOU with South Korea’s Ministry of Trade, Industry and Energy as well as Hyundai Glovis, LG Energy Solution and KST Mobility for the rental of electric taxi batteries and the sustainable reuse of EV batteries in energy storage systems (ESS).
The MOU signing ceremony took place at Namyang R&D Center in Korea, attended by government and company officials, including Prime Minister Sye-kyun Chung; Trade, Industry and Energy Minister Yun-mo Sung; Hyundai Motor Group Chairman Euisun Chung, Hyundai Motor Company President Young-Woon Kong; Hyundai Glovis President Jung Hoon Kim; LG Energy Solution President Jong Hyun Kim; and KST Mobility CEO Haeng Yeol Lee.
Under the agreement, KST Mobility, the taxi operator, will sell the ownership of batteries in newly purchased EVs to Hyundai Glovis, the battery lessor. KST Mobility then pays a monthly fee for battery usage. As a result, KST Mobility is able to have lower initial investment for EV purchases.
When the batteries are swapped after extensive usage, the removed batteries are reused in energy storage systems (ESS) for fast-charging EV taxis. To save cost, ESS is charged in the middle of the night when electricity rates are lowest and then charges EV taxis during daytime when electricity is comparatively expensive.
In this business model, Hyundai will oversee overall business operations while selling battery electric vehicles (BEV) to KST Mobility. Hyundai is also responsible for providing battery warranty and replacement batteries for vehicles that return batteries after use.
Hyundai Glovis will operate a battery rental service and recover batteries after initial usage. Recently, Hyundai Glovis enhanced relevant capabilities by acquiring a patent for a container that can efficiently transport large quantities of used batteries.
LG Energy Solution will analyze safety and residual value by purchasing batteries after use. It will also install these batteries into ESS units for fast-charging service and sell them to KST Mobility to utilize the chargers for its fleet of EV taxis. The driving and battery data from these EVs are shared with all parties under the MOU.
The Ministry of Trade, Industry and Energy plans to actively support the project in consultation with relevant ministries.
With the commercialization of battery rental service, Hyundai Motor expects that customers will be able to purchase BEVs at lower cost because they will only pay for the vehicle excluding battery cost. This is expected to foster EV adoption and expand the EV ecosystem.
In addition, this enterprise will demonstrate and validate the safety of used EVs and allow all involved parties to find means to appraise residual value of used batteries. This is expected to encourage the reuse of EV batteries. The shared EV battery data will also allow other new business opportunities to be explored.
Hyundai Motor Group continues to spearhead growth of an EV ecosystem and explore related business opportunities around the globe. The Group announced in November 2020 that it has signed a Business Cooperation Agreement (BCA) with SP Group to accelerate the adoption of EVs in Singapore.