Hyundai Motor Company, the government of South Korea, a Korean taxi company, LG Energy Solution, and logistics company Hyundai Glovis this month signed a memorandum of understanding (MOU) to demonstrate the commercial benefits of leasing electric vehicles and their batteries separately from each other.
Leasing batteries independently is financially appealing because batteries constitute a large percentage of the cost of a vehicle, but drivers don’t use much of the value built into a battery. Disaggregating the battery from the vehicle enables drivers to pay only for the value of the battery they will use, which lowers the upfront cost significantly.
Under the MOU, taxi operator KST Mobility will purchase new Hyundai EVs and immediately reduce the net cost by selling the batteries to logistics company Hyundai Glovis, which will be the battery lessor. KST Mobility then pays Hyundai Glovis a monthly fee for battery usage.
The result is a lower net initial investment. After the vehicles are retired or the original battery’s capacity falls below 70 percent, the original batteries are removed and reused in energy storage systems for applications such as storing energy from solar arrays and fast-charging KST’s EV taxis. In short, KST’s electric taxis will be partially charged by retired batteries from an earlier batch of taxi batteries.
Deploying batteries to EV charging locations in this manner can be economical because the stationary batteries can be slow-charged at night and when not in use, thereby reducing energy usage and demand charges during charging sessions. To ensure second-life performance, Hyundai will provide a warranty. When the batteries are sufficiently depleted that they are not suitable for stationary storage, they will be recycled or disassembled for smaller applications such as for single family homes during natural disasters and power outages, as well as off-grid applications such as campsites.
One of the open questions that signatories to the MOU will explore is the safety and residual value of second-life batteries. Answering this question will be LG Energy Solution who, as a party to the MOU, will provide such information to each of the signatories. Driving and battery data will also be shared among the group so that all can learn about the entire product lifecycle.
Yet another novel aspect of the MOU will be employing Hyundai Glovis’s patented shipping container whose dimensions can be adjusted to safely and efficiently carry batteries that vary by shape and size. This flexibility improves unit economics by increasing a single container’s capacity by as much as 3x. As the number of EVs and plug-in hybrids increases, so too will the number and variety of batteries needing to be redeployed. Hyundai’s shipping innovation will reduce barriers to moving batteries to where they can be used best.