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QuantumScape CEO Jagdeep Singh joins Yahoo Finance Live to discuss the company's partnership with Fluence Energy and the outlook for battery development.
- Well, shares of battery startup QuantumScape bouncing back just a bit here after hitting a new low in the session. The stock is down about 35% year to date. The company, though, recently announcing an expansion into stationary storage, signing a multi-year partnership with Fluence Energy to incorporate the firm's solid state battery technology into Fluence's energy storage products.
Let's bring in the CEO of QuantumScape, Jagdeep Singh, joining us for an exclusive conversation. Jagdeep, it's always good to have you here. You've talked about the opportunity with stationary energy, saying that could be a even bigger opportunity than what you're seeing in the EV battery space. I think your company put it at $385 million in terms of global market opportunity. How is this partnership allow you to be competitive in that space?
JAGDEEP SINGH: Yeah. So you're right that the stationary storage market for batteries could be around the same order of magnitude as transportation. I mean, transportation in our view is on the order of half a trillion dollars a year. So maybe $500 billion or so. And stationary storage, as you saw from the analyst reports, is between, say, $300 and $400 to billion in some of the estimates that are out there today.
Really, Fluence is one of the leaders in this space. They [INAUDIBLE] fraction of the market. And this partnership allows us to engage early, get to understand what the requirements are of that application, and be able to address that with what we're doing. As you know, the core product that we're building, we're targeting better energy density, so more energy in a finite volume, better power density, so a faster charge and discharge, safer operations. All those things resonate not only in the transportation sector, but also in the stationary storage sector. So we think we can really make an impact there as well.
- What kind of opportunity do you see there? I mean, you mentioned there a moment ago, you've built your mission, your business around the electric vehicle batteries. But this being the first non-automotive deal with Fluence, what does that really set up in terms of some of the market opportunity, and where have those discussions, or perhaps this as the case study and then future discussions, where do you see those starting to arise?
JAGDEEP SINGH: Yeah. So you're right. We've built the whole business around transportation. And that's very intentional. And we don't intend to change that. We didn't want to be one of those players that spreads ourselves too thin and doesn't really solve any problem. But also, our focus has been and will continue to remain to really solve the transportation problem better than any other battery can. But having said that, we've always said that the core technology is applicable to other sectors. Transportation, obviously, is a core.
But stationary storage is another. Consumer electronic devices could be another. Aviation, you know, it could be another. These are all areas from which we're getting a lot of interest. So the basic value was established a core beachhead, if you will, with transportation. And then once we're secure on that and have the customer traction there, start to venture out beyond that.
So that's what this Fluence deal represents. By partnering with one of the leaders in the space we really think we can start to better understand the needs, better target our product in the ways that make the most sense for this space, and over time really be a player in battery technology across multiple sectors.
- Let's talk specifically about your technology because you've mentioned that solid state technology, when you compare it to conventional lithium ion batteries, certainly has a significant benefit, not just from some of the infrastructure points that you just highlighted, but also from a cost perspective once it can be developed at scale. What does that timeline look like right now in terms of when you can get to scale, and what kind of costs benefits are we talking about?
JAGDEEP SINGH: Yeah. So first of all, as you pointed out, solid state, the way we're doing it, and really offers a number of key advantages. In fact, just yesterday you might have seen we announced some new data where we showed that we could actually charge these cells in 15 minutes 400 times in a row. So imagine really being able to fast charge your car in 15 minutes literally every single day for 160,000 miles of use. That's what we announced yesterday, which is a pretty compelling result. You really can't do that with conventional batteries because the batteries start to degrade as you charge them faster.
Now, what we showed back in December 2020 was the first single layer cells. That's one cathode, one anode, one [INAUDIBLE]. Since then, we have shown 4-layer cells, and then 10-layer cells more recently. We're going to continue adding to the number of layers that we build. Commercial cells will have on the order of a few dozen layers. We're planning on showing this year, delivering to our customers, cells that have those characteristics. And then in parallel with that, as you point out, we're building the production capability.
So we have a prepilot line that we have already secured a facility for where construction is quite advanced. In fact, we've moved people in. We're deploying tools later on this year. That facility will be producing cells that will be from the prepilot line sometime next year in 2023. And those are the cells that we expect will go into actual test cars. So by sometime next year, we hope to have cells that will go into test cars.
And then by the 2025 timeframe or so, mid-decade, we expect to see those cars on the road. So that's really our scale up goal. I know it takes a few years to turn up new battery factories. But given that we have the customer support and the core technology has been demonstrated, we hope that completing development and scaling up the rest of the production facility are things that we can execute on.
- And Jagdeep, I wonder if you can speak to some of the skepticism around your technology. You're already facing a class action lawsuit from some investors who've said you haven't necessarily been truthful and transparent about your technology. And I only raise that because this comes at a time where we're starting to see some of the air come out of companies that have come to market through SPACs like yourself. Looking at numbers here, you've got shares of half of these companies that have come to market through reverse mergers down at least 40%. What do you say to those investors who say that your stock is trading on nothing more than speculation with no product on the market? What are they buying into?
JAGDEEP SINGH: Yes. So I'm glad you brought this up. First of all, we vehemently disagree with any assertion that we haven't been transparent or truthful. We believe we've been more transparent than any other emerging battery company in terms of we've been showing the data. The data is the data. It is what it is. And any assertions to the contrary we just disagree with. Relative to the stock market, obviously, we can't predict the near-term stock market. There's lots of factors that influence stock prices in the short term. I mean, as Warren Buffett always says.
Obviously, in recent days and weeks, the combination of geopolitical tensions and the Fed raising rates have had an impact on high-growth stocks. But from our standpoint, we are focused on doing what we can control, which is to build products, to build the best batteries that we can build, batteries that can really move the needle in terms of energy density, which means range, fast charge times, 15 minutes as I mentioned, safety.
These are all things that we think based on talking to our automotive OEM customers are critical to help enable a more mainstream transition to electrified powertrains. And our belief is in the long run that even though while in the short run stock market prices can be almost random, that in the long run, those prices do correlate with fundamental company performance. That's all we can control. And we believe that if we execute it on that front that we will, in fact, create a lot of value for our shareholders.
And our track record so far is one of executions. If you look at 2021, we announced that we had four goals we wanted to meet during the year, including delivering 4 and 10-layer cells. And we hit every one of those goals last year. So I think our track record so far speaks for itself. Our data transparency speaks for itself.
And notwithstanding people that have an incentive to try to sort of pit out misinformation to try to manipulate stock markets for their own gain, we want to remain focused on building a product that works, partnering with these automotive OEMs who have very extensive battery testing capabilities, have tested our products, have validated them. We've done third party testing as well that's validated the results we published. So I think the assertion that in any way our data is not based in reality is just not correct.
- Well, Jagdeep, we appreciate you taking the time to join us today for this exclusive conversation. Jagdeep Singh, CEO of QuantumScape.