Hyundai to Launch EVs With 40% Lower Prices by Leasing Batteries in the Second Half of This Year

Ministry of Land, Infrastructure and Transport Approves 16 Regulatory Sandbox Projects at Mobility Innovation Committee

Battery Ownership Held by Leasing Companies, Consumers Pay Subscription Fees

Provisional Operation Permits Now Available

A new purchasing model that allows customers to lease the most expensive electric vehicle component—the battery—instead of buying it, while purchasing only the vehicle body, will be piloted in the second half of this year. Although a subscription fee will be required, by excluding the battery cost—which accounts for about 40% of an electric vehicle’s price—the barrier to entry for EV purchases is expected to be significantly lowered.

On May 11, the Ministry of Land, Infrastructure and Transport announced at the 8th Mobility Innovation Committee meeting that a B2C battery subscription service has been selected as an innovative technology demonstration exception (regulatory sandbox). Following this decision, Hyundai Motor Company will run a pilot program on the separation of ownership for electric vehicle batteries, targeting up to 2,000 units starting in October.

When selected for a demonstration exception, new technologies or services that cannot be launched under current regulations can be tested and verified. The demonstration period lasts for up to four years (two years plus an additional two years if extended), and if successful, legal amendments will allow the service to be institutionalized. Under the current Automobile Management Act, battery subscription services are not permitted, as the law does not allow for separate ownership of automotive parts.

With this exception, consumers will be able to purchase only the vehicle body and lease the battery from a leasing company by paying a monthly fee. The exact lease cost will be determined as companies prepare for the rollout. While some observers say that consumers may ultimately pay a similar amount due to the monthly fee offsetting the lower initial purchase price, the Ministry expects subscription fees to remain low, as leasing companies can capitalize on the residual value by reusing batteries. A Ministry official explained, "The goal is to set battery lease fees at a level comparable to the maintenance costs of conventional internal combustion engine vehicles."

In addition, even with the separation of battery ownership, authorities will ensure that manufacturers remain responsible for safety management and consumer protection—such as recalls, free repairs, exchanges, and refunds—just as is currently the case.

The committee also approved a measure allowing 200 autonomous vehicles in Gwangju, which has been designated as a self-driving demonstration city, to apply for temporary operating permits without self-certification. Typically, vehicles on public roads must undergo the same self-certification process as mass-produced vehicles; however, the software-defined vehicles (SDVs) being deployed in Gwangju face challenges in acquiring self-certification, limiting road testing. According to autonomous vehicle safety operation regulations, test drives will be permitted if the vehicles meet the requirements for temporary operation permits.

An agenda item designating autonomous vehicle field response vehicles as emergency vehicles was also selected for regulatory exemption. Previously, field response vehicles were treated the same as regular vehicles under the law when responding to accidents or obstructions on the road, limiting their ability to control the scene swiftly. Under this exception, these vehicles can now be designated as emergency vehicles under the Road Traffic Act.

Furthermore, a total of 16 projects were designated for special exemptions, including a pedal misoperation prevention device that automatically blocks sudden unintended acceleration, a tailored companion service for mobility-impaired individuals using specially modified vehicles, a transportation service that combines premium, deluxe, and standard seats within a single bus, and a service that installs small LED displays on the rear of vehicles, among others.

Minister of Land, Infrastructure and Transport Kim Yoonduk stated, "We plan to thoroughly examine consumer response and key issues, and anticipate these initiatives will help establish reasonable standards during the institutionalization process. We will work closely with relevant ministries to ensure smooth implementation and improve the system, creating a safe and convenient future mobility environment."