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🔌 Can Solid Power Deliver Solid Performance?
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🔌 Solid Power: Solid Performance?
If 2021 can be remembered for anything other than multiple Covid-19 virus mutations, it is SPAC listings. Solid-state battery developer Solid Power (SLDP) joined the list of other EV-related companies that took this route to go public. But it’s been a volatile week for the company. (Tweet This)
Solid-state batteries are touted to be the next big thing in battery technology. They are named thus because they lack a liquid electrolyte - a key component used in traditional Lithium-ion batteries. They’re supposed to be safer and have greater energy density than their Li-ion counterparts.
Conrad Stoldt and Sehee Lee were Ph.D. students at The University of Colorado, Boulder. The two researchers received a grant from the school’s Tech Transfer Office to develop the proof-of-concept for the solid-state energy storage they were working on. Solid Power was founded when Doug Campbell joined the duo in 2012.
A year later, the company received a $4.5M grant from Advanced Research Projects Agency-Energy (ARPA-E), which looks into innovations in all things energy. ARPA-E’s interest was in Solid Power's approach that used low-cost, abundant materials in the range of $10-$20/kg - something that would reduce battery manufacturing costs, and hence, the overall costs of EVs.
Solid Power signed its first contract worth $2.9M with the US Air Force in 2014. In December 2017, the company partnered with the BMW Group to jointly develop the all-solid-state batteries for EV applications. In 2018, BMW, along with Ford, Samsung, Hyundai, and Volta, a VC fund part of the Argonne National Laboratory, invested $20M in Solid Power’s Series A funding round.
Solid Power's first pilot production line became fully operational in September 2019. Ford and BMW reinvested in the Series B round in May 2021 when the company raised $130M. The two OEMs also signed joint development agreements for automotive-scale batteries from Solid Power's production line to be delivered in early-2022.
In June this year, the company jumped on the SPAC bandwagon when it decided to merge with a SPAC named Decarbonization Plus Acquisition Corp III, at an enterprise value of $1.2B with the plan to raise $600M for the company. Ultimately, when it merged with the SPAC last week, the company only raised $542.9M.
Investors such as Koch Strategic Platforms, Riverstone Energy Ltd, Neuberger Berman, and Van Eck Associates Corporation accounted for $195M of the fundraising. Solid Power is looking to expand capacity at its Colorado factory as it gears up for pilot production of its commercial-grade 100-ampere batteries in early-2022. These will then be sent to Ford and BMW for testing.
The company expects these funds to see it through until the first commercial launch with an automaker in 2026. CEO Campbell plans to license the technology to OEMs and other manufacturers and not get into large-scale production by itself. Instead, the company aims to be the industry leader in solid electrolyte materials.
Solid Power is not the first solid-state battery developer that went public through the SPAC route. Its closest rival, QuantumScape, had its own SPAC deal in November 2020 and was backed by OEMs such as Volkswagen and Stellantis. Solid Power plans to build a second Denver-area production facility to increase its throughput by 25x while quadrupling its manufacturing footprint.
Solid Power expects revenue of $2M for 2021 and an EBITDA loss of $21M. The company expects to cross the $1B mark by 2027. So does Solid Power have what it takes to stand up to competition such as QuantumScape and make investors happy? To try and deflect comparisons, Campbell asserted that the first 6-12 months' performance of the company's stock is "meaningless."
Maybe he was trying to preempt Solid Power mimicking QuantumScape's volatile performance thus far. As Master Oogway says in Kung Fu Panda, "One often meets his destiny on the road he takes to avoid it." To Campbell's surprise, investors seemed to have honed in on the word "meaningless" instead, which made for a rocky first week!
SLDP ended at $9.71, up 0.31%.
Company Snapshot 📈
SLDP $9.71 +0.03 (0.39%)
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