Jeong Eui-sun and Choi Tae-won Alliance Accelerates the Era of Electric Vehicle Popularization

Hyundai Motor-SK Group, Battery Service 'BaaS' MOU
Battery Ownership to Rental Companies
Buyers Pay Only Vehicle Cost
Electric Vehicle Price Competitiveness Secured Without Government Subsidies

[Asia Economy Reporters Su-yeon Woo and Ji-hee Kim] The memorandum of understanding (MOU) signed between Hyundai Motor Group and SK Group in the Battery as a Service (BaaS) sector is the first concrete collaboration following the meeting between Chung Eui-sun, Executive Vice Chairman of Hyundai Motor Group, and Chey Tae-won, Chairman of SK Group, on the 7th. This collaboration is expected to accelerate the 'era of electric vehicle popularization' that the two leaders have jointly envisioned.

Management and price reduction of batteries, which account for the largest portion of electric vehicle components, are considered prerequisites for advancing into the era of electric vehicle popularization. Until now, consumer prices for electric vehicles have been lowered through government subsidies, but the government cannot provide unlimited subsidies.

If the battery price, which constitutes the main part of the electric vehicle price, can be reduced, sustainable price competitiveness can be secured. Therefore, as the market matures, electric vehicle subsidies are gradually decreasing, and the concept of 'battery rental' is emerging as a new alternative. This is why Hyundai Motor Group and SK Group have agreed to collaborate in the BaaS sector, a service platform covering the entire process of electric vehicle batteries, including production, supply, rental, exchange, repair, charging, reuse, and recycling.

Chairman Chey Tae-won of SK Group (left in the photo) and Vice Chairman Chung Eui-sun of Hyundai Motor Group met at SK Innovation's Seosan plant on the 7th and took a commemorative photo. Photo by Hyundai Motor Group

The electric vehicle popularization model envisioned by Hyundai Motor Group and SK Group involves the rental company owning the battery, while the purchaser pays only for the vehicle. This model is evaluated as a 'win-win' business model for consumers, automakers, and battery companies because it lowers the initial price burden for buyers and allows effective repair and warranty of the complex battery.

Hyundai Motor Group can expect increased sales by enabling electric vehicle distribution at affordable prices and can reduce the burden of after-sales service (AS) in the battery sector, which still lacks expertise. From SK Group's perspective, this plan includes expanding new business models that encompass the battery downstream industry.

In the era of electric vehicle popularization, issues such as battery supply, repair, recycling, and disposal are expected to become prominent. Accordingly, 'battery service,' which takes responsibility for the entire battery operation process, is emerging as a promising industry. Global companies have taken the lead in adopting this service.

France's Renault Group introduced its own battery lease concept for the electric vehicle 'Zoe' model sold in Europe. The vehicle's starting price is in the mid-30 million KRW range, but with the battery lease program applied, it drops to the high 20 million KRW range. The Zoe, boasting price competitiveness, surpassed Tesla and Volkswagen to become the best-selling electric vehicle in Europe in the first half of this year. BMW Group devised a system that collects used electric vehicle batteries and utilizes them as energy storage systems (ESS).

In 2017, BMW built a 15MWh energy storage facility at its Leipzig plant in Germany by linking 700 used batteries. The system stores wind power electricity, which is not used regularly, in the used batteries and draws on it when needed, such as for plant operation. Last year, BMW Korea also established an ESS electric vehicle charging station called 'eGopang' in Jeju Island using the same method.

As Hyundai and SK, global leaders in their respective fields, prepare to enter the BaaS business, a seismic shift in the electric vehicle and battery markets is anticipated. Expectations for further collaboration between the two groups, leveraging their strengths from next-generation battery technology to charging infrastructure, are also rising.

At their meeting on the 7th, Executive Vice Chairman Chung and Chairman Chey held extensive discussions on next-generation battery technologies such as lithium-metal batteries, power semiconductors, and lightweight new materials applicable to electric vehicles. They also reportedly discussed plans to utilize SK gas stations and charging station spaces to establish electric and hydrogen vehicle charging stations. Earlier, Executive Vice Chairman Chung described the meeting with Chairman Chey as "a meaningful occasion to share directions for future battery and new technology development," adding, "We will continue to expand collaboration with companies possessing world-class technological capabilities."

This content was produced with the assistance of AI translation services.