QuantumScape drops 15% after short-seller report calls it a ‘pump-and-dump SPAC scam by Silicon Valley celebrities’ and compares it to disgraced startup Theranos

NYSE trader
  • QuantumScape fell as much as 15% on Thursday after short-seller Scorpion Capital compared the company to Theranos and called it a “pump and dump SPAC scam by silicon valley celebrities.”
  • The report is based on interviews with former QuantumScape employees and alleges that many of the battery startups claims are false.
  • “Our research indicates that QuantumScape can’t even reliably make test cells that work,” the short report said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

QuantumScape fell as much as 15% on Thursday after the battery startup was the subject of a scathing short-report from Scorpion Capital.

The report, titled “A pump and dump SPAC scam by silicon valley celebrities, that makes Theranos look like amateurs,” say that QuantumScape’s technical claims on its highly guarded battery technology are misleading, exaggerated, or fraudulent.

The report is based off of interviews with former QuantumScape employees, as well as battery experts and current Volkswagen employees that are focused on the auto company’s electric vehicle battery efforts.

QuantumScape is working to make a scalable solid-state battery that would promise quicker charging times, longer range, and lower costs for electric vehicles, relative to today’s lithium-ion batteries.

The company has partnered with Volkswagen, which has invested $300 million in QuantumScape over the past few years, but Scorpion Capital is skeptical that the battery startup can deliver on its promises.

“Our research indicates that QuantumScape can’t even reliably make test cells that work,” the report said, adding that “red flags around scaling and manufacturability render QuantumScape’s cells a pipe dream.”

Volkswagen and QuantumScape are targeting a production start of 2025 for the solid-state batteries. But Scorpion Capital doesn’t think that goal will be met. The short-seller believes Volkswagen is an unwitting partner that lends credibility to QuantumScape, similar to how General Motors partnered with Nikola, or Walgreens and Safeway partnered with Theranos.

“A key feature of the largest frauds is often the backing of a famous investor or corporate partner, in this case VW – ‘the smart money’ – that lends credibility to the scam,” Scorpion Capital said.

Scorpion Capital is short shares of QuantumScape, meaning it stands to profit if the stock moves lower.

Read more: BTIG identifies 14 beaten-down stocks poised to dominate the market this earnings season and extend their track record of crushing expectations

quantumscappe.JPG
Read the original article on Business Insider

Apple is using Tesla batteries to build a new energy storage facility for its giant solar farm in California

Elon Musk Tim Cook
Tesla CEO Elon Musk (left) and Apple CEO Tim Cook.

  • Apple is building a huge battery storage facility to support its solar farm in California.
  • The Verge reports the iPhone maker will be using Tesla “megapack” batteries.
  • Apple says it will be able to store enough energy to power 7,000 homes for a day with the batteries.
  • See more stories on Insider’s business page.

Apple is building a huge solar battery grid in California, and per county documents spotted by the Verge, Tesla will supply the batteries.

Apple announced the construction of the new solar energy storage project, called California Flats, on Wednesday. The company owns a 130 megawatt solar farm in California. It said in its blog post that the new development will allow it to store excess energy and deploy it when needed. According to Apple, it will able to store 240 megawatt-hours of energy – enough to power 7,000 homes for a day.

The Verge spotted in planning documents submitted by Apple last year to the Monterey County Board of Supervisors that it will be storing this energy using 85 Tesla lithium-ion batteries, called “megapacks.”

Read more: It’s time to retire comparisons between Apple and Tesla, once and for all

Tesla and Apple did not respond to the Verge’s request for comment, and did not immediately respond to request for comment by Insider. Monterey County’s planning chief did confirm Apple will be using Tesla batteries in an email to the Verge.

Apple energy storage
The site of Apple’s future energy storage facility, right next to its solar farm.

Tesla, which is more commonly known for its electric cars, brought out its megapack battery in 2019. The battery was touted as a viable product for large-scale energy storage projects.

Read the original article on Business Insider

LG plans to invest $4.5 billion in US battery production to meet growing electric-vehicle demand, including building at least 2 factories

Denise Gray, president of LG Chem Michigan Tech Center.
Denise Gray, president of LG Chem Michigan Tech Center.

  • LG Chem plans to invest more than $4.5 billion in US battery production, a senior executive said.
  • The investment, over four years, would help meet growing electric vehicle demand, Denise Gray said.
  • This includes plans to create at least two new factories, and would create 4,000 new jobs.
  • See more stories on Insider’s business page.

South Korea’s LG Energy Solution, a division of LG Chem which manufactures batteries, plans to invest more than $4.5 billion in its US battery production business over the next four years, a senior executive said.

This includes plans to build at least two new plants.

The company’s investment will result in an additional 70GWh of US battery production capacity to respond to growth in the electric vehicle market, Denise Gray, president of LG Energy Solution’s Michigan unit, said Thursday.

“We are eager to expand our production capacity so that it can meet the needs of the numerous global automakers across the US and Europe,” Gray said. “We are looking at at least two new factories in the US.”

Gray said the planned investment would create 4,000 new US jobs, more than doubling the current combined workforce of the LG Chem unit and its joint venture with General Motors in the country.

The company plans to select plant locations in the first half of the year, Gray said, adding their construction would create around 6,000 indirect jobs.

LG is already nearing completion of a cell manufacturing plant in Ohio with GM and the pair are in advanced talks to build a second facility in Tennessee. LG said on Friday the second plant would have a similar production capacity of around 35 GWh.

LG has been embroiled in a high-profile dispute with rival South Korean firm SK Innovation in the US after LG alleged that SK stole trade secrets.

The US International Trade Commission last month issued a 10-year order prohibiting most US imports of SK lithium-ion batteries. SK has lobbied the White House to overturn the ban, which could also be negated by SK and LG reaching an independent settlement.

LG Energy Solution Senior Vice President Chang Seung-se said the company’s latest US plans were unrelated and “more about (having a) very proactive and preemptive investment plan prior to confirmation of demand from our customers.”

Read the original article on Business Insider

You could soon charge an electric car in the time it takes to fill a tank of gas thanks to a startup partnering with Uber

Ample founders Khaled Hassounah and John de Souza stand in front of a battery swapping station.
Founders Khaled Hassounah and John de Souza stand in front of a battery swapping station.

  • Ample launched a charging network for Uber’s fleet in San Francisco.
  • The startup uses battery swapping technology to charge electric cars faster.
  • The company plans to deploy the network in multiple cities for consumers within the next few years.
  • Visit the Business section of Insider for more stories.

Ample, a startup based out of San Francisco, has launched a charging network that can recharge an electric car in under 10 minutes. The company came out of stealth mode on Wednesday.

The company started the initiative through a partnership with Uber and is funded by over $70 million from private investors. The network currently charges Uber’s fleet of cars in San Francisco and is expected to hit the general market within a couple of years.

Ample has already deployed two stations that are in full use in San Francisco for Uber’s fleet and is working on deploying more stations in several other major cities in California. The startup hopes to ease much of the range-bound anxiety of driving an electric car by making charging stations as fast and readily available as gas stations.

Ample uses the world’s first modular battery-swapping system. The company’s CEO, Khaled Hassounah, says the modular battery swapping system operates like “Lego blocks.” The size of the car determines how many battery modules the car needs and the modules can adapt to fit any vehicle.

Unlike typical charging stations – which require the electric car to be plugged in and can take anywhere from 45 minutes to 12 hours – Ample’s charging stations remove the car’s batteries and replaces them with freshly charged ones. The depleted batteries are then placed on shelves at the station where they are recharged for future use.

The system is also entirely autonomous. Customers will pay using an app system and don’t even need to get out of the car to charge the electric vehicle, according to Hassounah. The station automatically detects the vehicle and goes to work.

 

Ample’s President John de Souza said the goal of the company is to make electric cars as accessible as possible. For many drivers, the decision to transition from a combustion engine to an electric car is not feasible due to the nuisance of long charging times and cars that cannot travel long distances without stopping to get recharged.

“Electric cars shouldn’t have to be subsidized by the government or come at a huge personal cost,” de Souza told Insider. “It has to be more convenient than gas so it becomes a no-brainer for people to say, ‘Why wouldn’t I switch?”

The startup charges Uber fleet drivers per mile and offers its services for 10-20% less than the cost of gas. Hassounah said the battery’s modular system allows the process to be simpler and ultimately cheaper.  The entire set up also contributes to a cheaper price, as it can be constructed easily in a parking lot.

“We could deploy a whole city in a matter of weeks,” Hassounah told Insider.

The autonomous battery swapping stations can be easily put together or taken down as they come in their own structures that can be put together quickly in several large sections.

Battery swapping could increase the life span of an electric car

The swapped batteries will use the longest range technology available for each car to give drivers as many miles as possible between recharges. 

Hassounah said the swapping system would also contribute to the longevity of the vehicle, as the car would no longer be constrained by a dying battery, but would be continually receiving the newest battery chemistries.

Most EV batteries are insured for at least 100,000 miles, but lithium-ion batteries often get shorter and shorter ranges as they go. A new electric car battery costs several thousands of dollars, for example a Nissan Leaf battery replacement costs about $5,500, while a Chevy Bolt replacement costs over $16,000, according to Car and Driver.  Both cars have around a 250 mile range.

 The company is not the first to employ battery swapping technology and it faces competition from at least six startups with similar strategies. In China – the leader in the electric car industry – the practice is much more common. Chinese manufacturer Nio has largely found success with the process in China.

Companies have struggled with the technology in the past

In 2013, Tesla CEO Elon Musk showed off battery swapping technology, only to reject the technology two years later in favor of focusing on the company’s Supercharging stations. Musk called the technology “too expensive.”

Another startup based out of Israel, Better Place, also invested in battery swapping technology. Investors in the company lost over $850 million as the idea fell flat.

The company was unable to find automakers willing to manufacture vehicles with its technology and it was not financially sustainable to make enough different kinds of batteries to fit each type of electric car in the market.

Hassounah said Ample has learned from Better Place’s mistakes. The company’s modular battery is cheaper than Tesla’s attempt and can fit any car unlike Better Place’s battery swapping method. Ample is also in the process of working with five major automakers, according to Hassounah.

The company is also approaching charging stations differently. Ample plans to use renewable energy sources to recharge the batteries. The company captures wind and solar energy when available and delivers it to the cars when needed.

“Moving to electric but still burning fossil fuels is not solving the problem,” Hassounah told Insider.  “We save the absorbed energy, for peak times and plan to charge the vast majority if not all of it with renewable energy without increasing the cost.”

Ultimately, Hassounah said the company hopes to help get one billion electric cars on the road.

“It’s not battery swapping versus charging,” Hassounah told Insider. “We need all of the solutions. We are all aligned in finding different ways to solve the problem and modular battery swapping is just another way to solve the larger problem.”

Read the original article on Business Insider

Wall Street analysts tore down 7 competing car batteries. They found Tesla once again at the front the pack.

FILE PHOTO: Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China January 7, 2020. REUTERS/Aly Song
Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai

  • Tesla’s held a comfortable lead on electric-vehicle manufacturing and sales for years, after virtually inventing the industry on its own. 
  • But now it’s not the only player in town, and competitors are quickly catching up, according to UBS. 
  • To understand manufacturing costs and technology, analysts at the bank tore down seven battery models used by various competitors.
  • They found Tesla still has a comfortable lead and continues to out-innovate, but said companies like Volkswagen stand a decent chance of catching up soon. 
  • Visit Business Insider’s homepage for more stories.

The competition in electric vehicles comes down to one thing: batteries.

To better understand who’s using the best batteries in their cars – and how much they’re spending to do it – analysts at the investment bank UBS compared seven cells from all major manufacturers, including Tesla and its suppliers, as well as those for Volkswagen, General Motors, Toyota, BMW, and more.

Perhaps unsurprisingly based on pasts tests, Tesla once again came out on top by most measures. But because it relies on suppliers like CATL, LG Chem, and Panasonic who also supply other automakers, the lead is only slim, UBS says. 

“While Tesla continues to lead with the best overall powertrain technology,” the analysts wrote in an October note, “the cost lead in battery cells is minor by now and will depend on its new proprietary cell design in the future.”

And after Tesla posted record profits in October, UBS says the company has likely lowered its battery costs even further since it completed its study. That was a charge issued by Elon Musk at Tesla’s “Battery Day,” when he outlined a plan to in-source battery production and further drive down costs.

“We’ve got to get the cost of batteries down,” Musk told investors in September. “We’ve got to make – and we’ve got to be better at manufacturing, and we need to do something about this curve.”

That’s not just a Tesla problem, even if competitors try to copy things like its cylindrical cell design, as UBS predicts. Allied Market Research predicts the market for the lithium-ion batteries used in EVs will grow more than three-fold by 2027, from $36.7 billion in 2019 to $129.3 billion.

And the only way for anyone to catch up, in UBS’ eyes, will be to go all-in like Volkswagen.

“A steep cost reduction curve in combination with an ever-improving regulatory environment in favor of EVs makes it a necessity for auto companies to pursue an ‘all-in’ EV strategy, meaning that purely CO2-compliance strategies are likely to fail,” UBS said.

“Tesla will likely remain the cost and technology benchmark for several more years, and Volkswagen is the fastest follower on a global scale. Its €33bn committed EV investments of over a 5-year period are still unmatched.”

Read more: How much Tesla pays its employees, from software engineers to product managers

Read the original article on Business Insider