QuantumScape Corp.

QuantumScape Corp. focuses on renewable energy by developing solid-state battery technology to increase the range of electric cars. The company’s mission is to revolutionize energy storage in order to enable a sustainable future. According to QuantumScape, its battery solutions will provide significant improvements in cost, safety, range, charge time and cycle life over existing energy storage technology.

Founded in San Jose, California, in 2010, QuantumScape is currently in the process of merging with special purpose acquisition company Kensington Capital Acquisition Corp. (NYSE: KCAC). Upon completion of the merger, QuantumScape is expected to list on the New York Stock Exchange under ticker symbol ‘QS’. The combined value of the two companies is estimated at $3.3 billion.

The boards of directors for both companies have approved the merger, which is scheduled to be completed during Q4 2020. The completion of the merger is subject to Kensington stockholders’ approval and satisfaction or waiver of the other conditions stated in the definitive document, among other items. The transaction has resulted in over $1 billion in cash and funding commitments to date, including Series F financing from Volkswagen AG (OTC: VWAGY) and the Qatar Investment Authority.

The Next Generation of Battery

The solid-state lithium-metal battery designed by QuantumScape is a revolutionary new approach aimed at enabling a mass market transformation. While solid-state batteries are widely believed to be the next best power source for electric vehicles (having greater energy density and shorter charge times than current lithium-ion batteries), high manufacturing costs are a concern for the industry.

QuantumScape’s design is expected to enable lower manufacturing costs, making it feasible to mass-produce solid-state batteries to fuel the EVs of the future. According to the company, its battery solution is significantly better than existing offerings in terms of:

  • Energy – QuantumScape’s design increases volumetric and gravimetric energy density by eliminating graphite/silicon anode host materials.
  • Life – The company’s technology increases the life of the battery by eliminating capacity loss at the anode interface.
  • Fast Charging – The solid-state lithium-metal battery is designed to fast charge to 80% in less than 15 minutes. This is made possible by eliminating the lithium diffusion bottleneck in the anode host material.
  • Safety – QuantumScape’s design replaces the use of organic separators with a solid-state separator that is non-flammable and non-combustible.
  • Cost – The company’s technology is designed to lower costs by eliminating anode host materials and minimizing manufacturing costs.

Manufacturing Timeline for Solid-State Batteries

QuantumScape has been backed by and partnered with Volkswagen since 2012. In 2018, the two companies announced the formation of a joint manufacturing venture to prepare for the mass production of solid-state batteries.

The company’s manufacturing timeline is currently broken into three separate parts – product, 1GWh factory and 20GWh expansion, as detailed in the company’s September 2020 investor presentation.

The product timeline shows development and validation from 2021 through mid-2022, when OEM sample testing is expected to begin. The OEM sample testing will continue until mid-2023.

The company’s 1GWh factory is scheduled to be in the planning and engineering phase until the end of 2021. At that time, site selection, design and construction are expected to begin, continuing through the end of 2022. QuantumScape aims to begin equipment installation in 2023, with production validation and SOP to follow through 2024.

Expansion of the 20GWh factory is scheduled to enter planning and engineering phases in 2022 and will follow through 2023, with site selection, design and construction taking place later in the year. Equipment installation in this factory should occur beginning in 2025, with product validation and SOP starting mid-2025 and continuing into early 2026.

Investor Relations

According to the company’s September 2020 investor presentation, QuantumScape estimates a current $802 million in committed capital, with over $300 million spent on development to date. This number comprises pro forma $388 million series F financing, $188 million in anticipated funding concurrent with PIPE, $100 million of financing anticipated from a Volkswagen investment on December 1, 2020, and an additional $100 million subject to technical milestones.

The PIPE funding is a $500 million full commitment anchored by investors such as Fidelity Management & Research Company LLC and Janus Henderson Investors.

Once funding from Volkswagen has been satisfied, the automotive giant will gain an additional seat on QuantumScape’s board of directors. An additional seat will be added for Kensington once the deal closes.

Other investors who have taken interest in QuantumScape’s solid-state battery tech include:

  • Continental
  • SAIC Motor
  • Breakthrough Energy Ventures
  • Leland Stanford Junior University
  • Bill Gates
  • Khosla Ventures
  • Kleiner, Perkins, Caufield, Byers
  • Lightspeed
  • Capricorn Investment Group

Many of these have representatives on the company’s board of directors.

Management Team

Jagdeep Singh is the Founder, CEO and Chairman of QuantumScape. He received his MS in computer science from Stanford University. His past roles include Founder and CEO of Infinera (NASDAQ: INFN), Ciena (NASDAQ: CIEN), Qwest (fka OnFiber) and AirSoft.

Fritz Prinz is the Founder and Chief Scientific Advisor of QuantumScape. He is also a member of the company’s board of directors. He received a Ph.D. in Physics from the University of Vienna and is a professor of materials science and a chair for mechanical engineering at Stanford University.

Dr. Tim Holme is the company’s Founder and Chief Technology Officer. He has a Ph.D. in mechanical engineering and a Bachelor of Science in physics from Stanford University. He also received a post-doctoral associate from Stanford University.

Dr. Mohit Singh is the Chief Development Officer of QuantumScape. He received a Ph.D. in polymer physics from Berkeley. He is the solid-state energy storage world expert and CEO and co-founder of SEEO.

Kevin Hettrich is the company’s Chief Financial Officer. He has an MBA and an MS from Stanford University. He has worked in prominent positions at Bain Capital, McKinsey & Company and the U.S. Department of Energy.

Howard Lukens is the Chief Sales Officer of QuantumScape. He has held many VP roles in his career, including VP Worldwide Sales for Infinera, VP Strategic Sales for Ciena and VP Worldwide Sales for Lightera.

Jay Underwood is the company’s Vice President of Sales. He has an MS in engineering. He handled product planning for Infinera, where he eventually became the sales director for Northern Europe.

Mike McCarthy is QuantumScape’s Chief Legal Officer and Head of Corporation Development. He obtained his J.D. from Vanderbilt. He held the title of CLO and CAO at Infinera and was SVP and General Counsel for Ciena.

Investment Considerations
  • QuantumScape’s solid-state lithium-metal battery features a revolutionary new design bringing significant improvements in terms of cost, safety, range, charge time and cycle life.
  • The company’s revolutionary battery design is expected to reduce manufacturing costs – one of the greatest challenges to mass-producing solid-state batteries.
  • The company is in the process of merging with Kensington Capital Acquisition Corp.
  • The implied value of the resulting company is $3.3 billion. After the merger, QuantumScape will begin trading on the New York Stock Exchange under ticker symbol ‘QS’.
  • One of the major backers and investors in QuantumScape is Volkswagen, with the auto manufacturer providing significant funding to support the mass production of solid-state batteries.
  • QuantumScape has a fully committed PIPE of $500 million through consideration of companies like Fidelity Management & Research LLC and Janus Henderson Investors.
  • With shorter charge times and higher energy density, QuantumScape’s battery could be a game-changer in the fast-growing electric vehicle market. According to Allied Market Research, the EV market is projected to reach $802.81 billion by 2027.
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