Autos

Bill Gates-backed vehicle battery supplier to go public through SPAC deal

Key Points
  • QuantumScape, a developer of what are known as solid-state batteries, has entered into a definitive agreement to merge with blank check company Kensington Capital Acquisition Corp.
  • It's the latest SPAC deal for an automotive company. Shares of electric vehicle company Nikola surges through such a deal in early June. 
  • The implied value of the combined company, which will list on the New York Stock Exchange under the ticker QS, is $3.3 billion.
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QuantumScape CEO Jagdeep Singh on going public through a SPAC deal

An electric vehicle battery supplier backed by Microsoft co-founder Bill Gates and Volkswagen is the newest automotive company to announce plans to go public through a special purpose acquisition company.

QuantumScape, a developer of what are known as solid-state batteries, said Thursday it has entered into a definitive agreement to merge with blank check SPAC Kensington Capital Acquisition Corp. to become a publicly traded company in the fourth quarter.

It's the latest SPAC deal for an automotive company following electric vehicle company Nikola's IPO in early June.

Shares of Kensington were up more than 50% during trading Thursday morning to more than $15. 

The implied value of the combined company, which will list on the New York Stock Exchange under the ticker QS, is $3.3 billion. QuantumScape is expected to receive more than $1 billion in cash and funding commitments, led by Volkswagen and Qatar's sovereign wealth fund, as part of the transaction.

In 2018, Volkswagen and QuantumScape announced the formation of a joint manufacturing venture to prepare for the mass production of solid-state batteries.

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Many believe the batteries are the next best power source for future electric vehicles. Compared with today's lithium-ion batteries, solid-state batteries charge quicker and have a greater energy density, meaning vehicles can go farther with the same size battery pack. However, the batteries are extremely costly to produce.

QuantumScape CEO Jagdeep Singh said the company has addressed the "science risks" of solid-state batteries, saying they are capable of faster charging and a range up to double that of batteries today with the same size battery pack.

"We feel like we're ready to go public now," he said Thursday on CNBC's "Squawk Box." Singh said the investments will fund the company "all the way up to start of production" for the batteries, including at least one factory.

Justin Mirro, chairman and CEO of Kensington, said it was the potential for the technology as well as the company's progress in developing the batteries that attracted him to the company.

"We've done a lot of work on the technology," he told CNBC. "This is really a revolutionary step in terms of technology."

Mirro, who will be a board member of the combined company, said his team evaluated hundreds of companies before determining that QuantumScape was "by far" the best to create long-term shareholder value.

Mirro was an automotive engineer for General Motors and Toyota Motor before becoming an investment banker for 20 years. He formed Kensington Capital Partners in 1999.

"While there's a lot of other SPACs out there to claim they're automotive experts maybe for the last 30 days, we've been automotive experts for the last 30 years," Mirro said.

Singh said the company's automotive expertise attracted QuantumScape to do the SPAC deal.

Other investors in QuantumScape include German auto supplier Continental,  Chinese automaker SAIC Motor and several venture capitalist firms, according to the company's website.