QuantumScape Is Now All Set To Go Public After the Shareholders of the SPAC Kensington Capital (KCAC) Approve the Merger Agreement Between the Two Companies

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QuantumScape, the Bill Gates-backed startup attempting to commercialize solid-state batteries, has been the subject of phenomenal hype over the past couple of months as it inched ever closer to a public flotation of its shares. Today, the company has cleared the final hurdle and is now all set to become a public entity.

Following proposals were tabled before the shareholders of the Special Purpose Acquisition Company (SPAC), Kensington Capital (NYSE:KCAC), during a special meeting today:

A Short Seller Claims That QuantumScape (QS) Shared Only “Nice Powerpoint Slides” With Volkswagen (VW) Even Though the Solid-State Battery Cells Were Tested In Volkswagen’s Own Labs!

  • Business Combination Proposal: To approve and adopt the merger agreement, dated the 2nd of September 2020.
  • The Authorized Share Charter Proposal: To approve an increase in the authorized share capital
  • The Director Declassification Charter Proposal: To declassify Kensington’s board of directors.
  • The Dual Class Charter Proposal: To institute a dual-class capital structure where each Class A common share carries 1 vote while each Class B common share carries 10 votes.
  • The Additional Charter Proposal: To eliminate certain provisions in the charter that are no longer required along with instituting other changes that may be essential to the normal functioning of the combined company.
  • The Election of Directors Proposal: To elect nine directors to serve on the board.
  • The Equity Incentive Plan Proposal: To adopt the equity incentive award plan.
  • The NYSE Proposal: To approve the issuance of 199.527 million (199,527,779) new Class A common shares and 169.272 million (169,272,161) new Class B common shares to the existing holders of QuantumScape Capital Stock. The proposal will also allow for the issuance of 50 million new Class A common shares to the PIPE investors.
  • The Employee Stock Purchase Plan Proposal: To approve and adopt the employee stock purchase plan.
  • The Adjournment Proposal: To adjourn the special meeting to a later date.

Kensington Capital shareholders have now approved all proposals, thereby paving the way for the closure of the merger agreement with QuantumScape. Once that occurs, the shares of the combined company will start to trade on the New York Stock Exchange under the ticker symbol QS. Moreover, the combined company will adopt the name QuantumScape Corporation. In light of today's development, the stock is surging:

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As mentioned earlier, QuantumScape is one of the most promising companies currently trying to develop feasible solid-state batteries. Even though conventional lithium-ion batteries rule the energy storage sphere, they do pose certain limitations, including the combustibility of the liquid electrolyte that connects the anode to the cathode. On the other hand, a lithium-metal battery eliminates the liquid electrolyte entirely, creating a much safer battery in the process. Nonetheless, as we discussed in our previous post, such batteries do suffer from dendrites, where any microscopic electrode imperfections are amplified during the charging/discharging phases as lithium ions migrate and are then redeposited on the anode, resulting in the formation of intermediary structures 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.

QuantumScape claims to have spent over $300 million in R&D to produce a commercially viable lithium-metal solid-state battery. While technical details are scarce, the general consensus is that the company is close to overcoming the dendrite dilemma by utilizing a new material – called the LLZO – in a heretofore secret recipe. As per QuantumScape’s claims, the elimination of anode host materials from its batteries delivers significant cost savings while also increasing the energy density by 88 percent relative to a conventional lithium-ion battery. Crucially, its battery also allows for a 0 to 80 percent fast-charge in 15 minutes. However, we do not know how fast these solid-state batteries degrade.

QuantumScape certainly has strong backers. In June 2020, Volkswagen increased its stake in the company by $200 million. Additionally, it also enjoys backing from Microsoft's (NASDAQ:MSFT) founder Bill Gates, German auto supplier Continental, Chinese automaker SAIC Motor, and a number of venture capital firms.

The author has no position in any of the stocks mentioned. NewAgeAds LLC has a disclosure and ethics policy.
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