VW One-Ups Tesla With a Revolutionary Battery Breakthrough
After 10 years in stealth mode, QuantumScape launches an IPO, becoming the first U.S. battery company to go public in a decade
In the early 1970s, decades before the cellphone, the handheld video camera, the laptop, or the modern electric car, scientists figured out that lithium, the lightest metal on the periodic table, could make for a revolutionary battery. Researchers at Exxon, hoping to diversify away from oil, were among those who began a series of experiments to create a lithium battery. But as often as not, they had to call the fire department, because the highly volatile element would sometimes catch fire and blow up the lab.
Even as researchers since then have managed to enable a massive lithium-ion economy of portable electronic devices, they have never gotten beyond inserting just a small few crumbs of the metal into the batteries powering iPhones, Tesla automobiles, and Chromebooks. Pure lithium has remained the Holy Grail — the presumed best consumer battery possible using currently known principles and technology, but always out of reach since no one could figure out how to actually deploy the metal without the risk of fire.
Now, in a colossal claim, QuantumScape, a 10-year-old San Jose, California, startup backed by Bill Gates, said in an interview that it has resolved lithium’s problems, and that VW, the giant German automaker, expects to have cars using pure metallic lithium in their batteries on the road by 2025. Jagdeep Singh, QuantumScape’s CEO, also announced that the company is going public, using a so-called SPAC to list on the New York Stock Exchange in the fourth quarter. The post-listing valuation would be $4.3 billion, Singh said. In a SPAC, a company goes public by merging with an existing, listed shell company.
By increasing the distance that EVs can travel on a single charge by 50%, the QuantumScape-powered VWs would instantly be the electric vehicle to beat.
VW has verified the breakthrough, though Singh stressed that QuantumScape’s scientists have work remaining: QuantumScape must scale up a laboratory-based cell into a multiple-layer battery, and much could go wrong on the way. But if the claims pan out, the commercial consequences could be substantial, instantly catapulting both VW and QuantumScape into a huge competitive lead in the hotly contested battery and EV industries. By increasing the distance that EVs can travel on a single charge by 50%, the QuantumScape-powered VWs would instantly be the electric vehicle to beat. “There is a significant prize to being first,” said Paul Albertus, a professor at the University of Maryland.
Most of the information age is relatively new: It all flows from the invention of the transistor in 1948 at Bell Labs, and the most important technology today — the widely commercial smartphone — is only 13 years old. Not so with the battery. The lead acid battery, still used in almost every motorized vehicle on the planet, was invented in 1859. The guts of the modern lithium-ion battery were invented in 1980 and commercialized by Sony about a decade later. The Sony battery — copied by numerous other manufacturers over the years — worked by allowing just bits of lithium to shuttle between two electrodes, never at risk of building up into an explosion.
And for three decades since, that is about where we have been — lithium-ion batteries have slowly become much cheaper and more powerful. They enabled the iPhone revolution, and the Tesla phenomenon. But researchers never stopped thinking about pure metallic lithium, which, for one thing, could make EVs as cheap as conventional vehicles. In projects every year, the U.S. Department of Energy and labs around the world continued to fund research attempting to make the breakthrough.
There were two problems that no one could solve. One was that, if metallic lithium came into contact with liquid, it could explode. The other was that, inside the battery, it formed prickly needles that punctured the plastic separator that kept the two electrodes apart, thus causing a short.
In 2010, Venkat Viswanathan, a professor at Carnegie Mellon, took a graduate-level mechanical engineering course at Stanford. The professor was Friedrich Prinz. One of his classmates was a student named Tim Holme. And auditing the class was Singh, by then already a well-known Silicon Valley entrepreneur behind a company called Infinera. For a semester, they engaged in vigorous discussions of a “new quantum way of storing energy,” Viswanathan says. That same year, QuantumScape was born, employing Prinz, Holme, and “most of the rest of the class,” he says. Viswanathan himself signed on as a consultant in 2015.
It turned the heads of investors like Kleiner Perkins, Khosla Ventures, and Bill Gates, who threw tens of millions of dollars into the startup. Prinz and Holme also got a $1.5 million federal grant to research their idea.
The timing was propitious. In 2009, A123, a Boston-based battery startup, was the biggest IPO of the year, worth $371 million. Battery startups began coming out of the woodwork. From coast to coast, newfangled lithium-ion batteries were among the hottest projects you could be involved in. In part, they were funded by President Barack Obama, who set aside $2.4 billion from the post-crash stimulus to create a homegrown U.S. lithium-ion battery industry. But there was much exaggeration and some outright fraud. GM and Dyson, the British vacuum cleaner company, were among the big companies with dreams of getting into EVs that got snookered.
Prinz and Holme’s brainchild was a concept that they called an “all-electron battery,” which many of colleagues in the field regarded as a wacky idea. But it turned the heads of investors like Kleiner Perkins, Khosla Ventures, and Bill Gates, who threw tens of millions of dollars into the startup. Prinz and Holme also got a $1.5 million federal grant to research their idea.
It wasn’t long before QuantumScape figured out that the skeptics were right. They got out of all-electron batteries and swerved into the biggest problem vexing the conventional battery community — metallic lithium. QuantumScape went wholly stealth; it could do so because it was swimming in money. VW alone, forming a collaborative relationship in 2012, invested $300 million in tranches.
Singh says the venture capital investment was the key, buying the startup 10 years to work on a single problem, and outdoing competitors like 24M and Solid Power. Singh declined to go into detail but said that QuantumScape scientists finally discovered a new material that resolved much of the problem. Still, there were “hundreds” of other hurdles the team had to overcome to make the battery work, he says. Now, says Singh, he expects his company’s emergence to ignite a frenzy of new rivals. “People will now know it’s doable,” he says. “There will eventually be competition.”