Why QuantumScape Investors Still Waiting For New EV Batteries

QuantumScape Solid State Battery Development Lab.


The electric vehicle space has seen a handful of impressive stock market debuts in recent years, but the battery-powered launch QuantumScape’s The first few weeks of trading are remarkable even by EV stock standards.

QuantumScape, founded in 2010, went public through a merger with a special purpose acquisition company, or SPAC. Its shares rallied 49% on the first day of trading in November 2020 and rallied to a high of $131.67 on December 22 – up more than 400% in less than a month.

That operation gave QuantumScape a $54 billion valuation, fueled by investor excitement over the company’s solid-state battery technology, so-called because it eliminates electrolytes flammable liquid or gel stools found in lithium-ion batteries today. Moreover, it doesn’t harm that auto giant Volkswagen is a major investor, or Bill Gates has also joined the shares.

However, the hype that surrounded the company at the end of 2020 seems to have dried up, with the once “hot” stock dropping about 92% in value from that record high.

QuantumScape still stands by the lofty claims they make in 2020 and says their batteries are still on track to go into production in a few years. But the company faces a long and cash-intensive test road ahead. Competition is stiffer and Wall Street is still waiting.

Investors may have moved on, but the auto industry is still watching: In addition to Volkswagen, QuantumScape says it now has three other automaker partners signed on to test the company’s batteries. To date, those automakers have yet to be named.

A piece of flexible ceramic

It’s not hard to see why automakers are interested in solid-state battery technology. Today’s lithium-ion batteries are generally quite reliable, but their size, weight and recharge times make them less than ideal for electric vehicles. And while electric vehicle fires are rare, they tend to be intense and difficult to extinguish, partly because lithium-ion batteries can burn for hours.

The batteries QuantumScape is working on are called “solid-state” because they don’t need the liquid or gel electrolytes found inside existing batteries. A solid-state battery pack can be smaller and lighter than a lithium-ion battery pack of similar capacity, and the absence of liquid inside makes them less likely to catch fire.

In December 2020, QuantumScape CEO Jagdeep Singh promised a reliable solid-state battery, on a large scale, by the middle of the decade. Here are some of the statements he made in the process live streaming Presenting test results soon:

  • QuantumScape’s battery can recharge from 0 to 80% capacity in just 15 minutes, about half the time that most EV lithium-ion batteries require.
  • An EV powered by the company’s battery will have up to 80% more range than a current lithium-ion battery-powered vehicle, with a similar weight.
  • QuantumScape’s battery cells are “capable of surviving hundreds of thousands of miles” over a wide range of temperatures, including temperatures as cold as minus 22 degrees Fahrenheit.

“If QuantumScape can bring this technology to mass production, it has the potential to change the industry,” said Stan Whittingham, co-inventor of the lithium-ion battery and 2019 Nobel Prize winner in chemistry.

It seems too good to be true. Researchers have been tinkering with solid-state batteries for decades without success.

Inventors face an important challenge. Such batteries are vulnerable to damage because of the dendrites – needle-like structures that form inside, which, often within weeks, can short-circuit them and end their life.

QuantumScape’s key innovation is a separator made of a proprietary flexible ceramic material that is debris resistant and non-flammable. If it works as intended, the solid-state battery should be able to last as long as a typical lithium-ion battery while maintaining all the hoped-for benefits.

QuantumScape is still at least a few years away from mass-producing its batteries. But in lab testing, its technology seems to work.

During that 2020 live-streaming test that sent the company’s stock soaring, QuantumScape said a small prototype of its battery could last for more than 800 charge and discharge cycles — roughly the number that its own battery would have. an EV will last for the rest of its life.

But that test battery is a scaled-down version, and scaling it up into a ready-to-use battery for electric vehicles has been a slow process.

QuantumScape was able to repeat that 800-cycle test twice last year with a slightly extended battery. A larger one did 500 cycles in a test round earlier this year. But the company still has a few more rounds of development before it can reach a full-size prototype.

Road map ‘sample’

The steps required to get QuantumScape’s battery ready for road use will take at least two years – and possibly more – to complete.

Once the current prototype meets the 800 test cycle threshold, the company will need to build and test an “A sample” battery that is nearly full-sized, but still not quite as planned for mass production.

Singh told CNBC in an interview in April that A prototype will be ready this year to be sent to Volkswagen and the company’s other automotive partners for testing.

Then came the “B model”, similar to its predecessor but manufactured on a prototype assembly line, with similar tooling, but smaller and simpler than the machines QuantumScape intended to use. used on its final high-speed production line.

“The purpose of the Model A is for the customer to be able to confirm that the battery can actually function as it is supposed to,” Singh said. “The purpose of Model B is to then take that battery and use it to build a test car.”

The final step would be a final prototype, a C model, built for the full-scale assembly line. Singh said he now expects QuantumScape to deliver C models by 2024 or 2025.

But even those first test cars won’t be ready to hit the road, Singh said. Instead, they will be a major milestone for the company and its automaker partners. Then, test cars built using that Model C battery will be ready for production.

Those rounds of development, production, and testing will require a significant amount of cash.

Singh said he is confident QuantumScape has enough cash — about $1.3 billion as of the end of March — to be able to deliver those Model C batteries to its automotive partners for testing. But it will need to raise more money to build a factory large enough to supply automakers on a massive scale.

By then, it may have competition.

Toyota has said it is working on developing its own solid-state battery in-house and at least one other startup – based in Colorado Solid powersupported by BMW car and Ford Motor – on my way to started producing its own solid state versions simultaneous.

Raising the cash needed for a factory will be a challenge to do in the current economic climate, but Singh thinks raising that money won’t be difficult once investors get the chance. Test drive QuantumScape battery-powered cars.

“The good news about US capital markets is that if you can show that you have something really big and the market opportunity is really big, there’s going to be a lot of capital,” Singh said.

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