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20 May 2021

Quantumscape hits roadmap timeframe for layered cells

The QuantumScape stock performance has gone full circle since it came to market through a SPAC merger late last year, but there is increasing evidence that the company is funded through to production, getting closer to Volkswagen (VW), not further away, and is on track to launch inside its forecast timescale.

This week it hit key milestones in its relationship with VW which related directly to it being able to manufacture the type of solid state batteries that VW will want, in time to keep it ahead of the global battery curve through 2025.

One of these key steps was to demonstrate multi-layering of solid state cells, and it has now achieved this at a commercially relevant size (70x85mm). It also has examples of four-layer cells at a smaller size (30x30mm). Later this year it should demonstrate four-layer cells in the 70x85mm size.

By the time it enters production it will have to have both proven the technology and be able to manufacture at scale with dozens, if not hundreds, of layers.

In a shareholder letter issued this week it said, “At the end of the quarter, we were pleased to report that we met a contractually committed milestone with Volkswagen (VW), which resulted in an additional $100 million investment into QuantumScape in April.

It has to deliver and successfully test cells with separator thickness and area, near production targets, that would operate at predetermined rates of power and temperatures for a specified number of cycles and what it achieved it said was the “best cells we have ever made,” despite the pandemic. The cells achieved over 1,000 cycles with good capacity retention, even with zero externally applied pressure. Testing was conducted at 1°C, 30 °C and to 100% depth of discharge, with a Li-free anode.

It now has to up yields and throughput and then automate the process – something it has only ever said it will achieve fully by 2024.

QuantumScape said this week it will now select the location of their joint venture with VW for their solid-state battery pilot-line by the end of the year, probably in Salzgitter in Germany.

That pilot line is dubbed QS-1, at an initial capacity of 1 GWh of battery a year for electric vehicle batteries, rising each year until it hits 20 GWh.

QS-0 is the pre-pilot production line in the US at San Jose which will only make 200,000 cells a year, enough for hundreds of test vehicles each year.

Since the announcement of the merger with the Kensington SPAC in November, the public vehicle Kensington Capital Acquisition II initially surged to well over $20 billion in value, and for one day peaked at almost double this, and today like so many clean energy investments, it has fallen away and its value is about $11 billion. It seems a fair bet given how few active public players there are which have a developed solid state technology, and we’re sure it wants nothing more than to sit at any value above its initial merger value ($3.3 billion) until it begins shipments in volume.

At its results conference Quantumscape said it expects cash spend on operations for the year to be between $260 million and $320 million including building out the higher capacity QS-0 line. Even so it expects to enter 2022 now with $1.3 billion in the bank, up $300 million on the year so far.

Quantumscape uses a conventional cathode, but has promised to stay abreast of NCA (Nickel Cobalt Aluminum) and cobalt-free chemistries. Its design features a lithium-metal anode, which is deposited from the electrolyte and depends upon a solid-state ceramic separator all of which is referred to as its ‘anode-free’ architecture, which is what makes it so light.

Quantum scape says that it will hit between 380 Watt hours per kg (Wh/kg) and 500 Wh/kg. As an example the current Tesla product line is currently on 260, and even the new 4680 battery design is not expected to go far beyond 300 Wh/kg, and it is shooting for 400 Wh/kg in the 3 to 4 year time frame. So the roadmap is highly credible for VW and its battery partner.

Quantumscape expects prototype sampling in 2022, samples for test cars by 2023, and full commercialization in 2024.

But this will not be enough batteries for VW and it will either have to license the technology to rivals or significantly expand the production capacity of the joint venture using VW money.