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Solid Power, a Competitor to EV Battery Maker QuantumScape, Goes Public

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A Solid Power manufacturing engineer holds two 20 ampere hour all solid-state battery cells for BMW and Ford.

Courtesy of Solid Power

It’s not just QuantumScape anymore. Investors have another newly minted, well-capitalized, solid-state electric-vehicle battery technology company to consider buying.

Shareholders of


Decarbonization Plus Acquisition Corp III

(ticker: DCRC), a special purpose acquisition company, have approved a merger with EV solid-state battery technology start-up Solid Power. That means the latter is now a publicly traded company with more than $500 million in fresh capital on its balance sheet.

Now that the merger is done, Decarbonization’s stock symbol will change to SLDP on Thursday morning. Holders of Decarbonization stock don’t need to do anything. New investors looking for exposure to new EV battery technology will need to use the new name and stock symbol.

SPAC shareholders do have the right to redeem their shares for $10 instead of agreeing to the merger. That’s one reason the cash received on merger can fluctuate.

The merger brings roughly $540 million in cash onto Solid Power’s books. It was approved with 99%-plus of shareholders voting in favor, but some did redeem their shares, even though Decarbonization stock was at about $12 before the vote. Redeemers essentially swapped $10 for $12.

Solid state,” for EV batteries, refers to how the battery’s electric charge is facilitated. In traditional lithium-ion batteries, that facilitator is a liquid. Solid Power is one of a handful of start-ups trying to disrupt the tradition lithium-ion EV battery industry by creating a lithium-ion battery without a liquid electrolyte inside the battery cell.

Existing battery players, such as China’s


Contemporary Amperex Technology

(300750.China)—better known as CATL—also invest in solid-state batteries.

Solid-state batteries promise lower costs, faster charging, better safety, and longer battery life. Yet they haven’t been made at automotive scale, and solid-state battery packs typically operate under high pressure to stop defects from forming that degrade battery performance, making them harder to produce then lithium-ion ones.

Solid-state development is a race to see who can make a technology that is robust enough for cars first. Several partnerships have formed in that race.


QuantumScape

(QS) is part owned by


Volkswagen

(VOW3.Germany). Solid Power is aligned with


Ford Motor

(F) and


BMW

(BMW.Germany).

Solid Power is also partnering with


SK Innovation

(096770.Korea) to manufacture Solid Power-designed battery cells. Solid Power doesn’t plan to build large battery plants. It hopes to essentially license its technology to existing industry players and earn royalties. It’s an asset-light strategy that means Solid Power has enough cash to make it to profitability—if everything goes as planned.

Solid Power is still years away from seeing significant sales. The company projects about $1 billion in sales by 2027. Investors will have to watch milestones between now and then to judge company performance. “Our plan is to kick off the sample validation phase next year,” CEO Doug Campbell tells Barron’s, referring to sending battery cells to partners that demonstrate the technology works and can be made.

After that initial validation, investors can look for production to scale up and then more samples sent for testing to automotive partners.

The development road is long and unmapped, but the potential rewards for reaching the end of that road are large.

Decarbonization shares are up about 15% since just after the merger announcement in mid-June. The

S&P 500
and

Dow Jones Industrial Average
are up 8% and 3%, respectively, over the same span. QuantumScape stock is down about 3% over that period.

Solid Power stock is valued at about $2.2 billion based on roughly 184 million fully diluted shares outstanding, now that the merger is done. QuantumScape stock is valued at roughly $11 billion based on its fully diluted share count.

Write to Al Root at allen.root@dowjones.com

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