Kia to begin EV battery subscription service pilot project

South Korea's Kia Corp. said on Tuesday it has partnered with Hyundai Capital Services, Shinhan EZ General Insurance, the Seoul Taxi Association, Hanmi Taxi, and Sangrok Transportation for a pilot project that aims to introduce a battery subscription service.

The signed memorandum of understanding (MOU) aims to alleviate the initial purchase burden for consumers, thereby expanding the adoption of electric vehicles (EVs). Based on the outcomes of the pilot project, Kia plans to officially launch the service in the second half of next year.

Kia will spearhead the overall planning of the battery subscription service, supplying electric vehicles and overseeing the purchase and utilization of waste batteries. Meanwhile, Hyundai Capital will develop battery leasing products, and Shinhan EZ General Insurance will formulate battery-specific insurance products.

The Seoul Taxi Association, Hanmi Taxi, and Sangrok Transportation will be involved in the service trial, verifying its cost efficiency and operational stability as prerequisites for the formal service launch.

Additionally, the companies involved will collaborate to create a standard model for calculating battery residual value, a move aimed at overcoming the current limitations of existing battery subscription services.

Existing service conditions require the customer to transfer the ownership of the battery to the leasing company after the contract concludes, with all repair costs falling on the customer if the battery malfunctions. However, Kia indicated that by establishing a standard model for calculating battery residual value through this project, the battery's residual value could be increased, reducing the monthly subscription fee for customers and significantly cutting vehicle maintenance costs.

Moreover, with battery-specific insurance, battery replacements would be cost-free in the event of an accident or malfunction during the subscription period.

"A battery subscription service is a highly specialized product for commercial vehicles like taxis," a Kia official said. "When the official service is launched next year, it will initially be installed on Kia's taxi-specific Purpose-Built Vehicle (PBV) model, the Niro Plus."

Write to Hyung-Kyu Kim at khk@hankyung.com