QuantumScape Has Yet To Reveal Key Details About Its Solid-State Batteries but That Has Not Stopped Investors From Doubling Down on Its Imminent Merger With Kensington Capital (KCAC)
QuantumScape, the Bill Gates-backed company trying to develop solid-state batteries, is fast becoming a buzzword on Wall Street given the prevailing market mania that seeks to reward anything related to electric vehicles (EVs) or batteries. However, even as QuantumScape prepares to go public in a matter of days by merging with the Special Purpose Acquisition Company (SPAC), Kensington Capital Acquisition Corp. (NYSE:KCAC), key variables remain regarding the ability of the company to deliver on its hyped promises.
As a refresher, Kensington Capital had filed a Form 424B3 with the SEC on the 12th of November, announcing a special meeting of its shareholders – slated for the 25th of November 2020 – to approve the proposed business combination with QuantumScape. Should the SPAC’s shareholders approve this merger, the shares of the combined company will be listed on the New York Stock Exchange under the ticker symbol – QS.
This brings us to the crux of the matter. Even though conventional lithium-ion batteries rule the energy storage sphere currently, they do pose certain limitations, including the combustibility of the liquid electrolyte that connects the anode to the cathode. However, using a purely lithium metal battery – achieved by eliminating the electrolyte – presents a host of other problems. First of all, any microscopic imperfections are amplified during the charging/discharging process as lithium ions migrate and are then redeposited on the anode. This results in the formation of dendrites that can rupture the battery. Another problem that has been plaguing such solid-state batteries is their rapid degradation over a relatively small number of charging cycles. Given these long-standing challenges, QuantumScape’s battery has naturally garnered tremendous interest. Nonetheless, the company has not been very forthcoming with the specifics of its product formulation.
Bear in mind that QuantumScape claims to have spent over $300 million in R&D to produce a commercially viable lithium-metal solid-state battery. As per the claims of the company, the elimination of anode host materials from these batteries delivers significant cost savings while also increasing the energy density by 88 percent relative to a conventional lithium-ion battery. Crucially, this battery also allows for a 0 to 80 percent fast-charge in 15 minutes. However, we do not know how fast the company’s batteries degrade. As far as the dendrite problem is concerned, the company was purportedly able to eliminate the formation of these structures by utilizing a new material – known as the LLZO – developed by a German chemist, Werner Weppner. Please note though that the LLZO is not completely immune to the dendrite problem and that we do not definitively know whether QuantumScape has indeed employed this solution. However, given the paucity of any other alternative, there is a general consensus that the company has managed to develop a refined approach to using the LLZO.
Of course, QuantumScape is not the only company that claims to have formulated a functional solid-state battery. Samsung has been making waves in this sphere as well:
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In a development that is bound to boost confidence in QuantumScape’s technology, Volkswagen increased its stake in the startup by $200 million in June 2020, with much of the investment focused on solid-state battery research. Of course, Volkswagen’s investment makes intuitive sense as a viable solid-state battery would enhance the range of the E-Golf to 750 kilometers while also delivering added safety and faster recharging times. Moreover, QuantumScape also enjoys backing from Microsoft (NASDAQ:MSFT) founder Bill Gates, German auto supplier Continental, Chinese automaker SAIC Motor, and a number of venture capital firms. These high-profile investors have played an important role in boosting the euphoria surrounding QuantumScape and, by extension, the SPAC Kensington Capital. However, the matter of QuantumScape’s penchant for secrecy remains a perennial thorn for the discerning investors who would like to know more about the company’s revolutionary technology. As QuantumScape prepares for the glare that accompanies all public companies, perhaps this is the best time for moving away from the heretofore tight-lipped approach and embrace a more divulgatory attitude.