Tuesday, January 31, 2023

QuantumScape: Can the Battery Pioneer Live Up to the Hype?

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QuantumScape reached a valuation of nearly $ 50 billion last month after reporting a breakthrough in batteries that would help make electric vehicles “the world’s dominant form of transportation.” Its subsequent plunge highlighted the dangers of joining the rush for tech stocks – especially those in the race to bring battery-powered vehicles to the masses.

After SEO via a reverse merger in November, the Silicon Valley startup’s shares tripled, with investors betting its semiconductor technology heralded cells that would boost vehicle range and cut down times dump.

But the stock has fallen nearly 60% from its Dec. 22 high, fearing that QuantumScape is simply the latest hyped-up battery pack to break its promises.

The company never made any revenue and only tested a single cell prototype. To justify its still high valuation – its market capitalization remains around $ 20 billion – it must expand its technology in the face of competition from global heavyweights, including Samsung, Toyota, Panasonic and the French group Bolloré.

“I’m not convinced yet,” said Billy Wu, a drummer expert at Imperial College London. “There have been a lot of semiconductor companies that have come and gone in the past because it’s really hard to do.” Making something on a large scale, he said, was “millions of miles away from doing it in the lab.”

QuantumScape was co-founded in 2010 by India-born Jagdeep Singh with two scientists from Stanford University. The former telecommunications entrepreneur, who arrived in the United States at the age of 15 and graduated in computer science four years later, aims to supply batteries to the global auto industry.

QuantumScape said last month that it had overcome the obstacles that, over the past half-century, had prevented the development of a solid-state battery, which uses solid electrolytes rather than liquid in lithium-ion cells. conventional.

He revealed a ceramic material he had developed, the size of a playing card and as thin as a human hair, which allowed his batteries to be charged to 80% capacity in 15 minutes. In laboratory tests at room temperature, the cells maintained their capacity for 1,000 one-hour charge and discharge cycles – a theoretical range of 300,000 miles for a Tesla Model S.

QuantumScape Solid State Ceramic Separator © QuantumScape

The key to the material is that it allows the use of lithium at the negative electrode of the battery rather than conventional graphite. The metal has up to ten times the storage capacity of graphite, the removal of which makes the cell lighter and smaller, Singh said.

The company aims for an energy density of nearly 400 watt-hours per kilogram, compared to around 260 Wh / kg in current electric vehicles.

A panel discussion hosted by QuantumScape last month brought together prominent supporters of its technology, propelling much of the hype.

“I haven’t seen such good data anywhere else,” said Stanley Whittingham, who shared the Nobel Prize in chemistry last year for his work on lithium-ion batteries. “So I think it’s a real breakthrough. We just have to make the cells bigger and put them in the cars. “

JB Straubel, co-founder of Tesla, said that while he was inherently skeptical of claims made for battery technologies, performance data from QuantumScape was a game-changer.

“For me, that basically puts the lithium chemistry battery on a different kind of roadmap for innovation,” he said. “Seeing those kinds of performance numbers is almost unheard of – a 50% improvement, or so, in volumetric energy density, is incredible.”

But other battery scientists, including Mr. Wu, warn that going from one cell to the dozen needed for an electric car’s battery will require much more time, research and development.

Competitors, on the other hand, are further along the path to a viable product. Colorado-based startup Solid Power, backed by Ford, said last month that it had tested its 22-layer semiconductor cells and recorded an energy density of 330Wh / kg.

Annual Battery Consumption (GWh) column chart showing global demand for lithium batteries will be driven by electric vehicles

Peter Bruce, a professor at the University of Oxford who worked with lithium-ion battery inventor John Goodenough in the 1980s, said companies need to demonstrate high energy density and longevity under real conditions , and not just in the lab.

“While there have been significant advances in solid state batteries, there are still issues to be resolved,” he said. “Solid-state batteries will need to be significantly better than the best lithium-ion batteries for automakers to adopt.”

Mr Singh insists that the only risk investors take is in running the business and its technology has been proven to work. Comparing the challenge to increasing the production of a raincoat, he said, “You don’t want to worry about making the garment until you have the fabric first.”

Volkswagen, which has invested $ 300 million in QuantumScape and hopes to deploy its cells in 2025, has also committed an undisclosed sum to help it build a pilot plant. But if the German automaker has the right to buy the first batteries produced, QuantumScape can then sell them to any buyer.

“We are not a competitor to Tesla,” Singh said. “We are a battery company. I see no reason why every automaker should not be a potential customer of ours. ”

For now, many investors are keeping their faith. But observers warn that the valuation of QuantumScape remains exaggerated.

“I don’t think there’s anyone knowledgeable in the stock who is saying it’s worth that much because the math doesn’t add up,” said Mark Newman, analyst at Bernstein. “You have to assume the numbers are better than expected with zero risk to come up with that number.

The semiconductor battery race

Nio: The Chinese electric car start-up said this month that its electric sedan launched next year will have a solid-state battery with an energy density of 360Wh / kg. He did not reveal his supplier.

Toyota: The Japanese automaker is set to launch a solid-state battery in vehicles at the Tokyo Olympics scheduled for this year. It has also partnered with Panasonic to develop the technology.

Samsung: The Korean group has released data showing that its solid-state battery can be charged and discharged 1,000 times and will provide a range of up to 800 km.

Bolloré Group: The French industrial group has already deployed its solid-state batteries in a car-sharing service in Paris and in electric buses, even if they require high temperatures to operate. The company says it may have a battery that can operate at room temperature by 2025-2026.

Lithium Ganfeng: China’s largest lithium producer has said it is testing its solid-state batteries with automakers and plans to bring a product to market within the next two years.

Additional reporting by Kana Inagaki in Tokyo and Patrick McGee in San Francisco

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