Discover more from Due Diligence
Could this solid-state battery disrupt the EV industry?
Big things come in small packages.
Good morning, investors!
If this is your first time with us, don’t forget to subscribe here. If you enjoy today’s issue, please hit the heart button at the end of the report.
Without further ado…
And the smaller, the better — so long as it doesn’t impact performance.
Of course, we’re talking about electric vehicle batteries.
The typical EV runs on a lithium-ion battery, which is neither cheap nor light. For instance, Tesla engines range between 1,000 and 1,700 pounds, whereas the standard V6 engine is about 450 pounds. Generally speaking, the heavier the car, the worse its fuel efficiency, so there's an inherent incentive to downsize.
One solution is solid-state batteries.
Lithium-ion battery packs contain hundreds of cells. While this is an oversimplification, there are three critical components of a lithium-ion cell: a cathode, anode, and electrolyte — the last of which is in a liquid state for commercially available EVs.
There are several benefits to replacing liquid electrolytes with solid ones, but arguably the biggest is that it could allow for graphite anodes to be swapped out for lithium ones, creating what’s known as a solid-state lithium battery. Why is lithium preferred? Essentially, it has a much higher energy density and would conceivably require less material — so, picture a smaller, yet more powerful fuel cell.
For the record, my degree and background are in finance — not any of the sciences. If you want a deeper explanation of the science behind solid-state batteries, I recommend this Better Batteries piece by Grayson Hoteling.
The problem with solid-state lithium batteries is that no one’s been able to design one for commercialized use in EVs. Perhaps that’s changing.
QuantumScape is developing an anodeless architecture and proprietary solid ceramic separator. Here’s the company’s overview of solid-state batteries and their technology, in case my explanation wasn’t clear enough:
A solid-state lithium-metal battery is a battery that replaces the polymer separator used in conventional lithium-ion batteries with a solid-state separator. The replacement of the separator enables the carbon or silicon anode used in conventional lithium-ion batteries to be replaced with a lithium-metal anode. The lithium metal anode is more energy dense than conventional anodes, allowing the battery to store a greater amount of energy in the same volume. Some solid-state designs use excess lithium to form the anode, but the QuantumScape design is ‘anode-free’ in that the battery is manufactured anode free in a discharged state, and the anode forms in situ on the first charge.
How much potential does QuantumScape’s battery have? During a livestream presentation in December 2020, QuantumScape CEO Jagdeep Singh made a few eye-opening and potentially industry-shifting declarations:
QuantumScape’s batteries could recharge from 0% to 80% in about 15 minutes, which would cut the standard recharge time for most lithium-ion EV batteries in half.
QuantumScape’s batteries would have up to 80% more range relative to similarly sized EVs with lithium-ion batteries.
QuantumScape’s batteries could last hundreds of thousands of miles in a broad range of temperatures.
Naturally, that caught the market’s attention, skyrocketing shares of $QS above $130 at the time.
Although shares of QS have since retreated, it’s closer to making these initial claims a reality. This past December, QuantumScape delivered the first of three battery samples to its longstanding partner, Volkswagen. While it’s far from the finished product, it’s a step toward a commercialized battery.
“The purpose of the A sample is for the customer to be able to validate that the battery can actually work as it’s supposed to work,” —Singh, via a CNBC interview last April
Next step: the B sample, which would be manufactured on a prototype assembly line and used in test cars. Initial estimates were that the B sample would take about 18 months to deliver, so add $QS to the watch list — especially since shares have fallen far below where they once stood.
Three Eye-Opening Tweets
And finally, we close with three eye-opening tweets.
It pays to be long-term oriented (usually).
Teslas: better with age?
As they say, the stock market is forward-looking.
Thanks for reading. Don’t forget to hit the heart button if you enjoyed today’s report.
If you haven’t subscribed already, you can do so here.