South Korea’s Kia Corporation announced it is forming a partnership with several local companies to launch a pilot electric vehicle (EV) battery subscription service.

According to local reports, the automaker has signed a memorandum of understanding (MoU) with Hyundai Capital Services, Shinhan EZ General Insurance, the Seoul Taxi Association, Sangrok Transportation and Hanmi Taxi to launch a subscription for batteries with the ultimate aim of reducing the purchase cost of EVs by reducing batteries leasing fees.

Kia hopes to develop a leasing service that will encourage more companies and consumers which may otherwise be put off by high initial costs, to buy EVs.

Kia said it would evaluate the results of the pilot project in the second half of next year with a view to rolling out the service to individual customers and companies later on.

Kia will take control of the overall planning of the project, supply the EVs and oversee the purchase and usage of the batteries. Hyundai Capital will develop leasing products tailored to EV batteries, while Shinhan EZ General Insurance will insure the batteries. 

The Seoul Taxi Association, Hanmi Taxi, and Sangrok Transportation will help evaluate the cost-effectiveness of the service and help iron out any operational issues ahead of a commercial launch.

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By GlobalData

The companies will also work together to create a standard model to calculate the residual values of used EV batteries and help overcome any limitations relating to the battery subscription service.

Kia has indicated that if the batteries’ residual values are calculated to be higher than current levels, monthly subscription fees for customers could be significantly reduced.

Also, current leasing agreements mainly involve leasing companies taking ownership of the batteries at the end of the lease, with the customer having to incur any repair costs relating to the batteries. Under the project, these costs would be taken care of by the insurance companies.