Kia to Launch New Electric Vehicle Battery Subscription Service in 2024

by Woo Sooyoun

Published 04 Jul.2023 09:03(KST)

Kia is launching a pilot program for a battery subscription service to foster the growth of the electric vehicle ecosystem and enhance consumer benefits. Based on the pilot results, the official service is planned to be launched in the second half of 2024.

On the 3rd, Kia announced on the 4th that it signed a Memorandum of Understanding (MOU) for the battery subscription service pilot with related industry partners including Hyundai Capital, Shinhan EZ Insurance, Seoul Taxi Transport Business Association, Hanmi Industrial Transport, and Sangnok Transportation at Hyundai Capital headquarters in Jung-gu, Seoul.

In this pilot project, Kia will be responsible for overall planning of the battery subscription service, supplying EV vehicles, and securing sources for purchasing and utilizing used batteries. Hyundai Capital will develop battery lease products, and Shinhan EZ Insurance will develop battery-specific insurance products. The pilot participants, Seoul Taxi Transport Business Association, Hanmi Industrial Transport, and Sangnok Transportation, will verify cost efficiency and operational stability necessary for pilot service operation and official service launch.

Kia signed an MOU on the 3rd with related industries to conduct a pilot project for an electric vehicle battery subscription service. (From left in the photo) Koo Kyo-young, Executive Director of Shinhan EZ Insurance Management Support Group; Oh Kwang-won, CEO of Hanmi Industrial Transport; Yoon Seung-gyu, General Manager of Kia Domestic eBiz Solutions; Kim Byung-jin, Director of Hyundai Capital Auto Corporate Business; Kim Dong-wan, Chairman of the Seoul Taxi Transport Business Association; and Kim Chang-woon, CEO of Sangnok Transportation.
[Photo by Kia]

The participating companies will develop subscription services covering all areas, from establishing a standard model for calculating residual battery value to battery-specific insurance, as well as battery lease products. Once this service is introduced, consumers’ actual purchase price for electric vehicles will decrease. Customers will pay only the vehicle price excluding the battery and pay a monthly subscription fee for the battery. Since only the cost corresponding to the battery’s value during the subscription period is paid, vehicle maintenance costs will also be reduced.

Additionally, by utilizing battery-specific insurance enrollment, operating costs can be lowered. Currently, insurance coverage for commercial vehicles (taxis) that cannot subscribe to collision damage insurance (CDI) will become possible. This means battery repair costs will decrease.

Currently, battery subscription services offered in the industry simply allow customers to rent batteries and transfer battery ownership to the leasing company after the contract ends. Moreover, if a subscribed battery breaks down, customers must bear all repair costs, which is highly unreasonable. Kia aims to develop and verify an innovative battery subscription service model from the consumer’s perspective through this pilot.

A Kia official stated, “The battery subscription service is a product most specialized for commercial vehicles like taxis. When the official service launches next year, we will first equip this service on Kia’s taxi-exclusive PBV model, the ‘Niro Plus,’ so that customers who purchase electric vehicles for their livelihood can enjoy the benefits.”

Meanwhile, among electric taxis sold this year (January to May), corporate taxis accounted for only 10% of the total. Although electric taxi adoption is increasing mainly among individual taxi drivers, corporate taxis, which face sluggish business conditions and practical constraints such as shift changes and charging, have been slow to transition to electric vehicles. They pointed out that the high initial purchase cost of electric vehicles is the biggest reason for the delayed transition.