Hyundai, LG Energy to jointly develop EV battery swapping service

South Korea’s Hyundai Motor Co. will join forces with the world’s leading battery maker LG Energy Solution Ltd. to launch electric vehicle battery cell swapping services for EV customers. 

The two companies will create a collaborative council for Battery-as-a-Service (BaaS) with the Korean government, Korea Automobile & Mobility Association and Korea Battery Industry Association on June 19, industry sources said on Thursday. Battery producers SK On Co. and Samsung SDI Co. are considering joining the council, sources added.

The council will hold a meeting in Seoul to discuss eight key issues, including assessment of EV battery performance and carbon emission estimation, an EV industry official said.

BaaS is an EV business model of vehicle ownership and a subscription to the battery exchange program. EV drivers can quickly exchange a depleted battery with a fully charged one at a swapping station, which is convenient and saves charging time.

Hyundai is developing cars that can safely replace batteries for the BaaS system. The auto giant expects that the swapping system will play a crucial role in boosting EV sales.

“EV prices will fall if the BaaS market expands,” an auto industry official said. “A battery makes up around 40% of an EV price,” the official added.

China is one of the major markets for BaaS. Chinese EV maker Nio Inc. is operating around 2,400 battery swapping stations across the world’s largest EV market, enabling the exchange of batteries in around 10 minutes.

The global EV battery swapping market will grow to $36.6 billion by 2030, around 10 times the size in 2023, according to market research firm Stratistics MRC.

Although BaaS in Korea is in its infancy, the collaboration of Hyundai and LG Energy, respectively the top EV maker and battery producer in the country, is expected to speed up the advance of the local battery cell swapping market.

Hyundai received the government’s regulatory sandbox in February to develop an EV capable of changing batteries within five minutes. The carmaker, with its in-house venture PIT IN, will start a demonstration project of battery swapping stations for taxi drivers and delivery riders in the second half of this year.

LG Energy, with its in-house venture Kooroo, is also accelerating its battery swapping service for electric bikes.

Write to Jin-Won Kim, Hyung-Kyu Kim and Yong-Hee Kwak at jin1@hankyung.com

Jihyun Kim edited this article.