Battery Maker QuantumScape to IPO in Reverse Merger

Yet another electric vehicle-related company has agreed to be acquired by a special-purpose acquisition company (a SPAC, or blank check company), taking the first step on the way to a reverse merger that will result in an initial public offering (IPO). In a Thursday filing with the U.S. Securities and Exchange Commission, Kensington Capital Acquisition Corp. (NYSE: KCAC) announced that it has reached an agreement with privately QuantumScape to enter into a business combination.

According to the filing, on a still-to-be-decided merger date, a subsidiary of Kensington will merge with QuantumScape, with QuantumScape to survive as a wholly-owned direct subsidiary of Kensington. Kensington will issue approximately 368.8 million shares of Kensington common stock in connection with the merger. The combined company will be named QuantumScape and is expected to trade on the New York Stock Exchange under the ticker symbol QS.

QuantumScape is developing “next generation” solid-state lithium-metal batteries for electric vehicles (EVs). The company’s anode-less technology could “redefine the battery landscape,” according to board member J.B. Straubel, former chief technology officer at Tesla Inc. (NASDAQ: TSLA).

Thursday’s agreement values QuantumScape at $3.3 billion, and the reverse merger is expected to be completed in the fourth quarter of this year.

QuantumScape claims its lithium-metal solid-state battery has a higher energy density than traditional lithium-ion batteries, recharges more quickly, has a longer lifetime, is safer (non-flammable and noncombustible) and costs less.

Among QuantumScape’s backers are a couple of heavyweights: Volkswagen and Bill Gates. The German automaker has poured $300 million into QuantumScape, including a $200 million investment announced in June.

Gates revealed unspecified investments in QuantumScape, both personally and through his Breakthrough Energy Ventures fund, in a blog post at GatesNotes dated August 12.

On September 22, the same date as its 2020 investor day, Tesla is sponsoring an eagerly awaited Battery Day, during which the company could reveal its so-called million-mile battery or offer more details on other battery and EV projects the company is working on.

The company has a project, code-named Roadrunner, that is looking at the possibility that Tesla will design and manufacture its own battery cells in-house. Tesla is also testing a tri-motor powertrain named Plaid that extends the top-end of vehicle range to more than 400 miles.

And QuantumScape does not lack smaller challengers either. Denver-based Solid Power is also working on an all-solid-state rechargeable battery that could be in commercial vehicles by 2026 or 2027. According to Crunchbase, Solid Power has raised $20 million in a Series A funding round that included Samsung among the five investors.

The QuantumScape timeline has its solid-state battery in vehicles (most likely from VW) in 2025.

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