QuantumScape Solid State Battery Development Lab.
Quantumscape
The electric vehicle space has seen a few impressive stock market debuts in recent years, but the QuantumScape battery rollout in its first few weeks of trading has been impressive even by EV stock standards.
QuantumScape, founded in 2010, went public through its merger with a Special Purpose Acquisition Corporation, or SPAC. Its stock jumped 49% on its first trading day in November 2020, and rose to a high of $131.67 by Dec. 22- More than 400% profit in less than a month.
That run gave QuantumScape a staggering $54 billion valuation, fueled by investor excitement about the company’s solid-state battery technology, so named because it gets rid of the flammable liquid or gel electrolyte found in today’s lithium-ion batteries. Moreover, it didn’t hurt that auto giant Volkswagen was a big investor, or that Bill Gates also took a stake.
But the hype that surrounded the company in late 2020 appears to have all but dried up, as once-hot stocks shed about 92% of their value from that record high.
QuantumScape stands by the lofty claims it made in 2020 and says its batteries are still on track to start production within a few years. But the company faces a long, cash-intensive road to testing ahead. Competition is intensifying, Wall Street is still waiting.
Investors may have moved on, but the auto industry is still watching: In addition to Volkswagen, QuantumScape said it now has three other automaker partners signed on to test the company’s batteries. So far, the names of these automakers have not been disclosed.
Small piece of flexible ceramic
It’s not hard to see why automakers are interested in solid-state battery technology. Existing lithium-ion batteries are generally 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 put out, in part because lithium-ion batteries can burn for hours.
The batteries QuantumScape is developing are called “solid state” because they don’t need the liquid or gel electrolyte found inside existing batteries. A solid state battery pack can be smaller and lighter in weight than a lithium-ion battery pack of similar capacity, and the lack of liquid inside makes it less likely to catch fire.
In December 2020, QuantumScape CEO Jagdeep Singh promised a solid, reliable battery, at scale, by about the middle of the decade. Here are some of the allegations he made during Live view of early test results:
- QuantumScape batteries can be recharged from zero to 80% of their capacity in just 15 minutes, about half the time required by most lithium-ion EV batteries.
- An electric vehicle using the company’s batteries will have up to 80% greater range than those powered by existing lithium-ion batteries, of similar weight.
- The QuantumScape battery cells were “capable of running for hundreds of thousands of miles” in a wide range of temperatures, including temperatures as low as minus 22 degrees Fahrenheit.
“If QuantumScape can turn this technology into mass production, it has the potential to transform the industry,” said Stan Whittingham, co-inventor of the lithium-ion battery and 2019 Nobel Prize in Chemistry, in a QuantumScape press release.
It sounded too good to be true. Researchers have been fiddling with solid-state batteries for decades, to no avail.
Inventors faced a major challenge. These batteries were prone to failure due to dendrites — needle-like structures that form inside, often within weeks, which can short an electrical circuit and end their life.
QuantumScape’s main innovation is a spacer made of a flexible, proprietary ceramic material that resists bifurcation and cannot catch fire. If they work as intended, solid state batteries should be able to last as long as a typical lithium-ion battery while maintaining all the desired benefits.
QuantumScape is still at least a few years away from being able to mass produce its batteries. But in lab tests, its technology appears to be working.
In a 2020 live test that sent the company’s stock prices soaring, Quantumscape said a small prototype of its battery was kept for more than 800 cycles of charge and discharge — roughly the number an electric car battery will last for its life.
But that test battery was a scaled down version, and resizing it to a battery ready for use in electric cars was a slow process.
Quantumscape was able to repeat the 800-cycle test twice last year using slightly denser batteries. One larger one passed 500 courses in a test round earlier this year. But the company is still a few more development rounds away from achieving a full-size prototype.
“sample” roadmap
The steps needed to get QuantumScape batteries ready for road use will take at least two years—and possibly more—to complete.
Once the current prototype meets the 800-cycle test threshold, the company will need to build and test a nearly full-size “sample” battery, but still not exactly what it plans to mass-produce in the end.
Singh told CNBC in an interview in April that The product model will be ready this year to be sent to Volkswagen and other car partners for testing.
Then comes the Sample B, similar to its predecessor but made on a typical assembly line, with tools similar to the machines QuantumScape plans to use in its eventual full-speed production line, but smaller and simpler.
“The purpose of Sample A is for the customer to be able to verify that the battery can actually work as it is supposed to,” Singh said. “The purpose of Sample B is to take that battery and use it to make test cars.”
The final step will be a final prototype, sample C, made for the complete assembly line. Singh said he currently expects QuantumScape to deliver C samples in 2024 or 2025.
But even those first test cars won’t be ready for the road, Singh said. Instead, it will be an important milestone for the company and its automakers partners. After that, the experimental cars that were built using sample C batteries will be ready for production.
These development, production, and testing rounds will require significant amounts of cash.
Singh said he’s 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 car partners for testing. But it will need to raise more money to build a plant large enough to supply automakers on a large scale.
By then, she might have a competition.
Toyota has said it is developing its own solid-state batteries in-house, and at least one other startup — Colorado-based Solid Power, backed by BMW and Ford Motor — is on track to start manufacturing its own solid-state versions around the same time.
Raising the amount of cash needed for a plant may be difficult in the current economic environment, but Singh believes raising that money will not be difficult once investors have the opportunity to drive QuantumScape battery-powered test cars.
“The good news about US capital markets is that if you can prove that you have something real and that the market opportunity is really big, there is a lot of capital available,” Singh said.