Hyundai Motor has signed a MoU with South Korea’s Ministry of Trade, Industry and Energy as well as Hyundai Glovis, LG Energy Solution and KST Mobility to foster an EV ecosystem and sustainable battery reuse. An analyst speaking to just-auto says the move – which will includes a battery leasing element – will be closely watched by others in the auto industry, as well as governments interested in encouraging EV take-up.
Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, says the MoU has potential to support the EV growth in South Korea and will be a use case for OEMs across the world. He says there needs to be a focus on batteries to boost EV adoption.
“The cost of acquisition along with the availability of charging infrastructure and concerns related to battery-life are key factors that affect the large-scale uptake of electric vehicles,” Bakar says.
He notes that OEMs across the globe have been exploring opportunities to increase the uptake of electric vehicles through innovative business models, battery-as-a-service being one of them.
“An EV sans battery reduces vehicle upfront cost by 30-40% and battery can separately be rented out or leased, dividing the cost of owning and maintaining over a vehicle’s lifetime,” Bakar maintains.
GlobalData estimates that a customer can lease EV battery for over eight years at a price that is equivalent to the purchase cost of an EV battery.
“Leasing is a better option for customers, who do not clock high number of kilometers every year,” Bakar points out.
“Furthermore, renting or leasing out batteries offers additional benefits such as timely inspection of battery residual values by service provider, free/warranted replacements and assistance by service provider in events of breakdown. Shared mobility, logistics and delivery companies with large fleets will gain significant cost-benefits with renting/leasing model covering repair, service and replacement of batteries.
“Some OEMs and governments in key markets such as China and Europe already have an active battery renting or leasing business model. However, it has not reached the required rate of commercialization globally. Hyundai’s implementation of the EV ecosystem with battery being rented or leased out can be a good example for other OEMs, government and stakeholders such as energy companies and mobility players across various countries to replicate the model to boost the uptake of electric vehicles.”