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(Reuters) – QuantumScape, the 10-year-old Silicon Valley battery startup backed by Volkswagen AG (DE:VOWG_p), said on Thursday it plans to go public through a reverse merger with Kensington Capital Acquisition Corp with an enterprise value of $3.3 billion.
San Jose-based QuantumScape, a 2010 spinout from Stanford University, said it will form a joint venture with VW to produce solid-state battery cells, starting in 2024, for VW’s electric vehicles, and eventually for other carmakers.
“Our ambition is to be a (battery) supplier to the industry as a whole,” QuantumScape founder and CEO Jagdeep Singh said in an interview.
QuantumScape is the latest transportation startup to tie up with a special purpose acquisition company, or SPAC. Among the recent SPAC-backed transactions: Lidar maker Luminar, electric truck maker Nikola, electric shuttle maker Canoo and electric carmaker Fisker.
A SPAC is a shell company that raises money through an IPO to buy a private operating company, typically within two years.
VW has committed more than $300 million to QuantumScape. Other corporate investors include Shanghai Auto (SS:600104), which is partnered with VW in China, and German auto supplier Continental AG (DE:CONG).
Venture backers include Bill Gates, Khosla Ventures and Kleiner Perkins. The Qatar Investment Authority also participated in the latest funding round.
Ahead of the merger announcement, QuantumScale raised $500 million from institutional investors, led by Fidelity Management & Research.
The SPAC deal is expected to close in late 2020, when the new company will trade on the NYSE under the ticker symbol QS.
Singh said QuantumScape’s lithium-metal battery uses a solid ceramic electrolyte which he said is safer than using a conventional liquid electrolyte. It also eliminates the need for an anode, allowing the battery to charge more quickly – up to 80% capacity in just 15 minutes. Also, its energy density is much higher, exceeding 400 watt-hours per kilogram, which far surpasses 250 Wh/kg for the best current lithium-ion batteries.
“The company has an opportunity to redefine the battery landscape,” said Tesla (O:TSLA) co-founder J.B. Straubel, CEO of Redwood (NYSE:RWT) Materials, a Silicon Valley battery recycling startup.
Kensington is a SPAC headed by longtime investment banker Justin Mirro, a specialist in transportation-related deals who will join QuantumScape’s board. Kensington’s directors include Tom LaSorda, former vice chairman of Chrysler; Don Runkle, former vice chairman of Delphi, and Matt Simoncini, former CEO of Lear (NYSE:LEA) Corp.
