Hyundai Motor has said it has agreed to launch a pilot battery leasing business targeted at fleets of electric taxis, with the collaboration of the South Korean government and leading local companies.

The memorandum of understanding (MOU) was signed this week with the Ministry of Trade, Industry and Energy, the automaker’s logistics affiliate Hyundai Glovis, leading EV battery manufacturer LG Energy Solution and local taxi firm KST Mobility, with the aim of establishing a rental business for electric taxi batteries and also for the sustainable reuse of these batteries in energy storage systems (ESS).

With this project, Hyundai is looking to develop an EV battery ecosystem which would reduce the initial cost burden of EV purchases, as well as developing new services that enable the reuse of the batteries.

Under the agreement KST will sell the ownership of the batteries in its newly purchased EVS to Hyundai Glovis, which will then lease them back to KST. This will reduce the initial EV purchase cost, with KST paying a monthly rental once the vehicles start generating income.

After extensive usage, the batteries will be swapped and the old ones used in ESS to power fast-charging stations for the taxi fleet. To save costs the ESS batteries can be charged at off-peak times such as in the middle of the night when electricity rates are lowest.

Under the agreement Hyundai will manage the overall business, sell EVs to KST and also provide warranties for the batteries. An initial 20 Kona EVswill be supplied for the project.

Hyundai Glovis will operate the battery rental service and recover batteries after their initial use. The company recently acquired a patent for container technology that allows for the efficient transport of large numbers of used batteries.

LG Energy Solution will monitor the battery safety and repurchase the batteries after their first use. It will sell them to KST Mobility and install them in ESS-powered fast-charging stations. Data generated from EV and battery usage will be shared with all parties.