QuantumScape To Go Public In Reverse Merger
QuantumScape is a US-based battery developer that is backed by car manufacturer Volkswagen. The company has announced that it has agreed to a reverse merger financing deal with Kensington Capital Acquisition Corporation, a special purpose acquisition company as well as a $500m private investment placement.
The QuantumScape reverse merger will result in a new company that will list on the New York Stock Exchange with a valuation of approximately $3.3bn after the transaction is completed. The deal is expected to close by the end of 2020 and the new company will trade on the New York Stock Exchange under the ticker symbol QS.
QuantumScape was founded in 2010 to develop solid-state lithium batteries that are used mainly in electric vehicles. Unlike current lithium-ion batteries, that use liquid or gel to create a charge, solid-state batteries use a solid material instead. The design replaces the traditional graphite/silicon anode with a lithium-metal anode which is said to improve recharge time providing up to 80% capacity in under15 minutes. In addition, the new battery has a much higher energy density that exceeds 400 watt-hours per kilogram compared to the 250 watt-hours per kilogram that the best current lithium-ion batteries can deliver. While this new battery technology offers a potentially higher energy density and some safety advantages they have faced challenges in reaching the market, particularly with regard to their high cost and questions about their durability.
The company is expected to use the proceeds from the reverse merger to continue product development of their battery technology and to undertake validation of the technology through a production phase in which the batteries will be included in Volkswagen's range of electric vehicles. Volkswagen had previously formed a joint venture with QuantumScape to mass produce their batteries and they have been in collaboration since 2012. Volkswagen has also committed to investing an additional $200m in the company which adds to its 2018 investment of over $100m.
The proceeds of the reverse merger, the private investment and additional funding from Volkswagen and the Qatar Investment Authority will contribute over $1bn to the new company. While the company does not disclose details of its previous funding, its website does list a series of companies that are investors including: carmaker SAIC Motor, automotive parts manufacturer Continental, Khosla Ventures, Stanford University, Lightspeed Venture Partners, Kleiner Perkins, Capricorn Investment Group, Breakthrough Energy Ventures and Bill Gates.
QuantumScape could potentially disrupt the electric vehicle manufacturing market if its battery technology lives up to its promise. With batteries being the single most important element that determines an electric vehicle's range and recharge time and the global move away from fossil fuels, the new company has significant growth potential. This is reflected in Kensington Capital Acquisition's stock price soaring over 85% on news of the merger.
New EV SPAC! Bill Gates and VW-backed QuantumScape to go Public! (KCAC, QS)