"Pitin's Challenge: Battery Subscription Service Aiming to Replace LPG Stations [Digging Energy]"

[Specialist Report]
Hyundai In-House Venture Startup
Expanding to Phase 2 Subscription Service Next Month
in Partnership with Hyundai Glovis and Poen
Developing Intelligent Battery Swap Robots
Applicable to Various Vehicle Models

At the Pitin headquarters in Anyang, Gyeonggi, mechanics are replacing electric vehicle battery packs. Photo by Kang Jinhyung

On May 29, on the first floor of the Pitin (PIT-IN) Station in Manan-gu, Anyang, Gyeonggi Province, a Hyundai Ioniq 5 electric taxi entered the Pitin Station. The vehicle had come not for a regular electric vehicle charge, but for a battery pack replacement.

Once the car was lifted onto a specially designed lift, two engineers skillfully began loosening the bolts on the battery pack located underneath. Meanwhile, a robot followed a designated route, received the removed battery pack from beneath the vehicle, and transported it to a charging rack set up right next to it. At the same time, another robot picked up a fully charged battery pack from the charging rack and moved it under the Ioniq 5. When the robot lifted the battery pack into the designated position, the workers quickly reconnected the battery pack to the vehicle.

The entire process, from the vehicle's arrival to its removal from the lift after the work was completed, took just 12 minutes. During this time, the taxi driver, who owned the car, was leisurely enjoying coffee in the first-floor lounge. This is the scene at Pitin Anyang Station, the first electric vehicle battery swap service in Korea.

Kim Segwon, CEO of Pitin, whom we met that day, said, "Our goal is to replace the liquefied petroleum gas (LPG) stations that taxi drivers frequently use." Pitin is a startup established in 2022 through Hyundai Motor Group's in-house venture incubation program. In 2023, the company filed two patents for its intelligent lift and replacement robot for battery swapping, and in July of that year, it became independent and immediately established a corporation.

Although Hyundai's in-house venture incubation program is typically a one-year process, Pitin decided to graduate early, confident in its success. Upon establishing the corporation, Pitin also secured 2.2 billion won in pre-Series A investment.

"Service Limited to Commercial Electric Vehicles Only"

The first location Pitin chose to build a 'station' for its battery swap service was Anyang. CEO Kim explained, "Anyang is grouped with Gunpo, Gwacheon, and Uiwang as a single region, and with a high penetration rate of electric taxis, it was the optimal location for a pilot project."

CEO Kim showed a map that database-mapped the locations of taxi operators nationwide. Around Manan-gu, where Pitin Anyang Station is located, taxi companies were clustered closely together. This software was developed in-house by Pitin and will also be used to select locations for the upcoming second and third stations.

Kim Segwon, CEO of Fitin, is being interviewed at the Fitin headquarters in Anyang, Gyeonggi Province on the 29th. Photo by Kang Jinhyung

The battery swap service was launched to address the inconvenience of charging electric vehicles. Its advantages include reducing charging time and having a specialized company safely manage the batteries.

However, battery swap services have yet to be considered successful globally. Israel's Better Place, in partnership with Renault, introduced a battery swap service early on but went bankrupt in 2013. Tesla in the United States also piloted a battery swap service in 2013, but determined it was not commercially viable and discontinued it after two years.

Currently, Chinese electric vehicle manufacturer Nio and battery cell company CATL are aggressively expanding battery swap services. In China, this expansion is driven by full government support, so it is still difficult to determine whether it will succeed. This is why the Korean electric vehicle and battery industries are paying close attention to Pitin's business model.

Negative outlooks on battery swap services stem from several factors: the difficulty of standardizing the various types of battery packs, the need to secure sufficient inventory, and the significant costs involved in building swap stations and automation facilities. The recent acceleration in electric vehicle charging speeds also raises questions about the necessity of battery swap services.

CEO Kim, after studying overseas cases, found ways to address these issues. First, he limited the service to commercial electric vehicles, not regular passenger cars. Regular drivers, whose driving distances are not long, have little need for swap services. However, commercial electric vehicles, which drive 400,000 to 500,000 kilometers and require frequent charging, are a different story.

CEO Kim emphasized, "Our business model is fundamentally different from existing battery swap services because it started from the question of how to operate commercial electric vehicles stably and for a long time."

On the 29th, electric vehicle battery packs are stored at the Pitin headquarters in Anyang, Gyeonggi Province. Photo by Kang Jinhyung

He also made it clear that battery swapping is not simply an alternative to charging. CEO Kim explained, "Batteries are expensive items that account for 40% of the price of an electric vehicle," and added, "We have introduced the concept of renting electric vehicle batteries, just as you would rent high-value products."

CEO Kim demonstrated a program that allows real-time monitoring of the batteries currently under management. At a glance, it showed battery swap history, cell temperature and cell voltage (indicators of battery safety), and SOH (State of Health), which indicates the remaining lifespan. The battery swap service (BSS) is now evolving into 'Battery as a Service' (BaaS).

Expanding to Battery Subscription Service Next Month

Pitin is currently providing battery swap services to 12 electric taxis as part of its first phase. The company plans to expand to a second phase with a subscription service.

There are regulatory hurdles to overcome for the battery subscription service. Under the current Automobile Management Act, electric vehicle batteries are considered vehicle parts, so ownership cannot be separated. In October last year, the Ministry of Land, Infrastructure and Transport granted a special exemption allowing separate registration of electric vehicles and battery ownership. Utilizing this exemption, Pitin is preparing to launch a battery subscription service in July in partnership with Hyundai Glovis and battery remanufacturing company Poen.

Hyundai Glovis will own the batteries, and Pitin will pay rental fees for them. Poen will supply remanufactured batteries and guarantee their quality, with Hyundai Glovis covering the cost. Pitin will provide the battery subscription service to taxis and receive payment in return.

In this structure, taxi operators can purchase electric taxis from Hyundai Glovis at a price excluding the battery cost. For example, a Kia EV6 for taxi use, which costs 50.6 million won, can be purchased for 18.6 million won (including the electric vehicle subsidy). This is 63% cheaper than before and even less expensive than an LPG taxi, which costs 27 million won.

Additionally, taxi operators can save on fuel costs compared to LPG vehicles by using the battery subscription service. CEO Kim said, "The battery subscription service fee is about 1.4 million won per month, which is cheaper than the average monthly fuel cost of 1.6 million won for LPG vehicles. If you can operate a taxi at a lower cost than an LPG car, there is no reason not to switch to electric vehicles." Pitin plans to initially provide the battery subscription service to 30 electric taxis and gradually expand its customer base. In the future, the company plans to expand from electric taxis to the freight sector as well.

Electric vehicle battery management program developed by Petein. Photo by Kang Jinhyung

Contrary to some concerns, not much inventory is needed for battery swapping. Because of the 'sharing' concept, it is sufficient to have 1.3 times as many batteries as vehicles. For example, to provide battery swap services for 30 electric vehicles, only nine extra battery packs are needed as spares.

The biggest challenge for battery swap services has been the standardization of battery packs. Pitin is developing intelligent robots capable of swapping batteries across various car brands. Even without standardizing the battery packs, the robots can handle the swaps. To develop this technology, Pitin applied for and was selected for the Deep Tech TIPS program by the Ministry of SMEs and Startups last year. Once these intelligent robots are developed, it is expected that the current limitations of battery swap services can be overcome.

"Goal to Expand to 250 Stations by 2032"

Pitin plans to expand its directly operated stations to four to verify profitability, then transition to a franchise model. In addition to the Anyang station, the company is preparing to launch additional locations in Suwon, Incheon, and Seongnam. One of the most important factors in securing profitability for the battery swap service is how much the initial investment cost can be reduced.

The first station in Anyang has so far required an investment of 3 billion won. CEO Kim explained, "The second-generation model can reduce the total initial investment to 2 billion won (with only 400 million won for replacement equipment) and can handle 100 swaps per day." This is similar to the investment cost for a 30-ton LPG filling station. CEO Kim set a target of achieving a 20% profit margin per station. Pitin plans to expand the number of stations to 250 by 2032. There are also plans to expand overseas, including to Indonesia.

Pitin Station does not only provide battery swap services. It also operates a membership program for regular electric taxis. Members can use their membership card for charging and car washing, with post-settlement billing. The number of members has already exceeded 200. This means that 28% of the 700 taxis in the Anyang area use the Pitin Station.

CEO Kim expressed his ambition, saying, "In the future, we want to expand our services to include light maintenance and tire replacement, and further develop Pitin Station into a total service hub for commercial electric vehicles."