Scientists from Stanford are pushing electric car batteries to a new standard, but will they keep sparking?

Scientists from Stanford are pushing electric car batteries to a new standard, but will they keep sparking?

Created by scientists from Stanford University a decade ago, QuantumScape became a public corporation in November after joining Kensington Capital Acquisition, an incredibly unique acquisition company, with Volkswagen’s financial support (Spac). Until 2026, the firm will not produce substantial sales, but it is now estimated at $43 bln, or even $51 bln on a thoroughly diluted basis. It’s fantastic from the environment point of view that developers are contributing money to electric transport. Others would be motivated to join the emissions-cutting cause by promising those riches. However, it appears that QuantumScape investors have taken hold of the same speculative fever that propelled Tesla as well as China’s NIO.

During the previous week, an aggregate of $2.8bn of the battery company’s shares was traded every day. For Alphabet, with $1.2 trillion market capitalisation, that is more than the volume. Technical considerations may have led to the surge in QuantumScape: trading is only open to a limited shareholder’s percentage registry. It is a long fall for the retail investors who purchase stock at these prices. The good news first. The “solid-state” of the battery cells of QuantumScape has obtained very promising results in lab experiments, indicating that advanced chemistry will one day allow electric vehicles to move further and be powered faster at a cheaper price.

This is promising because substantial output gains from traditional lithium-ion batteries are getting more challenging to extract. The science team of Chief executive Jagdeep Singh seems to have hauled off a real feat. However, when the Spac agreement was revealed in September, the parties agreed a $3.3bn valuation was reasonable. This appeared ample for an enterprise with less than 250 workers and one that doesn’t have a final product or warehouse. QuantumScape is currently worth over 10 times its original valuation following a blistering stock market rally and more than car manufacturers like Ford Motor as well as battery giants including Panasonic and Samsung SDI.

In August, those who acquired stocks in the Kensington SPAC celebrated a return of 1,060 percent, while QuantumScape warrants which once sold for 80c are currently worth 50 times more. The three founders of Stanford, Singh, Tim Holme and Fritz Prinz have been billionaires on paper. Volkswagen that made an investment of around $300 million in the QuantumScape Company will hold about $10 billion worth of a 23 percent stake. The Kensington sponsor, owned by Justin Mirro, a prominent Moelis & Company and RBC Capital Markets investment banker, has also done well, as is frequently the case with the Spacs. It got shares as well as warrants worth over $900m, a big return on investment of $7million or so, and one done in only a few weeks of work.

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