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Solid Power, which develops automotive battery technology, will be listed through a special purpose merger and acquisition with Decarbonization Plus Acquisition III (NASDAQ: DCRC). In this Fool Live video clip recorded on October 18th, Fool.com contributor John Rosevear breaks down Solid Power’s practices and why the stock has received attention-and in the process provided investors with information on solid-state batteries Technical courses.
John Rosevear: The first company, the company name is Solid Power. It is currently in the SPAC transaction. The SPAC merger will be completed in the fourth quarter. If you ask me, SPAC is named Decarbonization Plus Acquisition III, which is a truly exaggerated SPAC name. The stock code is DCRC, Nasdaq. If you want to find it later, this is it. If you look at QuantumScape (NYSE:QS), what Solid Power is doing, it was a hot stock to talk about, buy, and invest in last year. If you fully understand QuantumScape, you will have an understanding of solid state batteries, but if you don't want them, this is why they are important.
This is the holy grail technology, or at least seen as an important step forward for electric vehicles, which will make them safer, they will be able to charge faster and so on. We can learn a little bit about the technology here. I will try not to bore you. In short, there are three lithium-ion batteries today. There is a cathode containing lithium and other metals, an anode containing carbon and sometimes silicon, and a separator, which is a porous polymer commonly used in the current technology. There is also a liquid called an electrolyte, which is usually dissolved in Lithium in solvent, lithium salt. The idea here is that when you charge the battery, lithium ions are driven from the cathode to the anode.
The CEO of QuantumScape explained this well. It's like a metal ball being pushed up a hillside. You push them up the hill, and then fix them on the anode on the top of the hill until the battery discharges, which will release ions to roll down the hill and release energy, in this case, in the form of electricity. Science is more complicated, battery science Very complicated, if you are familiar with any other technology, and you think that the new technology will take months or quarters, then its progress will be very slow; in terms of batteries, we have considered for decades. It can make these truly frustrating investments.
There are four things to understand now about lithium-ion batteries because they are suitable for electric vehicles. At that anode, at the top of the mountain, it takes six carbon atoms to hold one lithium atom. This is why current batteries are heavy. It takes time for lithium atoms to diffuse into the carbon, which means to settle down on the top of the mountain. This is why charging takes a while. A chemical reaction occurs during each charge and discharge cycle, consuming a little bit of lithium, and one or two small steel balls are lost somewhere. This is why the battery loses capacity over time. Last but not least, liquid electrolytes and polymer separators are both combustible. This is why there are fires in electric vehicles and why it is so painful to extinguish them.
The idea of solid-state batteries is that they solve all four problems by replacing carbon anodes with lithium or a combination of lithium and other materials. In theory, this will make the battery smaller, faster to charge, longer lasting, and less susceptible to fire. This is also an added benefit, and their manufacturing costs may be cheaper. Now, from the perspective of battery technology, there is a problem that lithium anodes cannot be used with electrolytes. What you need to do is the diaphragm, which is located between the cathode and anode, made of solid material, and can also be used as an electrolyte. This is why we call them solid-state batteries because they can drain liquid.
There are several ways to solve this problem. Some schools of thought and people trying to make solid-state batteries, this is something that has been trying for decades. I have several different routes. QuantumScape is a company that has attracted much attention, and they are developing a new material of ceramic separator. In theory, this can provide very good performance, but the problem is that it is difficult to manufacture on a large scale. This is why when you heard about QuantumScape and expected that their batteries will not be put into production until 2025 (perhaps later).
At the same time, Solid Power is using a sulfide separator. This is worse than ceramic for various reasons, but it is relatively easy to manufacture and can make very good batteries. Ceramic separators may make great batteries, but Solid Power and the companies pursuing this path can make very good batteries. The good news is Solid Power, they think they will start mass production in early 2023. They will conduct trial production next year and will supply them to two automakers, both of which are investors, namely Ford and BMW. Then we enter the company itself.
The combined transaction valued the combined company at US$1.2 billion. QuantumScape has a market value of more than 10 billion U.S. dollars. They all target the same market, and both have automaker partners, QuantumScape and Volkswagen. Enter the details of the SPAC transaction. After the transaction is completed, they will have about $600 million in cash, which is enough to get them listed. BMW and Ford are both investors, and they will become early customers. Last but not least, they said that their total target market is approximately $220 billion. If they land with better mousetraps, there are many potential benefits here. This is why.
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