The South Korean government said Monday that it would revise the law to allow battery subscription services for electric vehicles, a move that is expected to pull down EV prices almost one-third from their current price tag and lower entry barriers for potential buyers. 

The Ministry of Land, Transport and Infrastructure said that a 36-member regulatory reform committee held a meeting on Thursday to approve the planned revision.

The current law on vehicle registration does not allow two separate registrations of an EV and an EV battery for ownership. But the revision, which will become effective within this year, would allow double registrations of an EV battery and EV with different owners. 

Carmakers and financial firms can own EV batteries and run rental services for drivers. 

For example, Kia’s latest EV Niro, launched in March, costs 45.3 million won ($34,700). Under the law, the car’s price can be reduced to 14.3 million won up front after deducting 10 million won in government subsidies and a 20 million won battery pack. The driver can pay for the battery pack on a separate monthly subscription plan. 

Market experts said this would allow more drivers to shift to EVs for price competitiveness, but also create an ecosystem that can keep EVs on the road for longer.

“When battery subscription models become commercialized, (EV) prices will fall dramatically, which will become a major factor for drivers to turn to EVs. Not only that, as batteries are often the first components of a vehicle to die, being able to simply replace it, rather than the whole car, can keep EVs on the roads longer,” said an industry insider. 

According to the industry, finished carmakers like Hyundai Motor Group are seeking partnerships with battery makers such as SK On and LG Energy Solution, so they can create a Battery as a Service platform that oversees battery leasing, rental, repair, charging and recycling. 

Last year, the Ministry of Trade, Industry and Energy signed an agreement with LG Energy Solution, Hyundai Glovis and KST Mobility to work on a battery service for EV taxis. 

Recently, automakers have been eying battery subscription services as a critical pricing strategy to garner more customers. 

In April, Vietnamese EV maker VinFast launched a lifetime EV battery subscription plan in the US, in which the company leases a battery pack to each customer on a monthly basis. The batteries have a lifetime warranty, and will be replaced by VinFast when they can no longer be charged above 70 percent. Two options offer a monthly battery subscription fee of $35 and $44, for traveling 500 kilometers.