Battery firm QuantumScape taps public markets

Yet another transportation startup plans to take the shortcut to an IPO and this time, it's a battery company.

What's happening: QuantumScape, a battery startup backed by Volkswagen and Bill Gates, said on Thursday it plans to go public through a reverse merger with Kensington Capital Acquisition Corp.

Why it matters: The deal gives $700 million to QuantumScape to commercialize its promising solid-state batteries for electric vehicles.

• The deal values the company at $3.3 billion.
• It's the latest in a string of transactions in which venture-backed transportation startups merge with a publicly-traded shell entity called a special purpose acquisition company (SPAC).
• EV companies Nikola, Canoo, Fisker and Lordstown Motors have gone public (or will soon) in this manner. Lidar manufacturers Velodyne and Luminar have, too.

The intrigue: QuantumScape's lithium-metal battery claims a much higher energy density than today's technology and uses a solid ceramic electrolyte that the company says is more stable than a conventional liquid electrolyte.

• Instead of the conventional graphite/silicon anode, the battery uses a lithium-metal anode that translates to a much faster charging time.
• Medium's Steve LeVine explains the significance of the breakthrough here.

What to watch: QuantumScape, a 10-year-old spinout from Stanford University, said it will form a joint venture with VW to produce solid-state battery cells, starting in 2024, for the German automaker's electric vehicles, and eventually for other carmakers, per Reuters.

• A VW spokesman said the timeline is more likely five to 10 years.