Solid Power joins the battery SPAC fray with plan to go public at a $1.2B valuation

Solid-state batteries have been the next big thing in lithium-ion for years now, with the theoretical promise of better energy density in a safer package than what’s available today. The question is whether the solid-state contenders out there can build a mass-producible and cost-competitive version of their pilot products in time to keep up with the continual cost improvements of today’s lithium-ion battery giants.

On Tuesday, Solid Power announced its intent to tap the public markets to finance its go at this target, with a plan to go public on the Nasdaq stock exchange through a reverse merger with special-purpose acquisition company (SPAC) Decarbonization Plus Acquisition Corporation III.

The transaction is expected to raise $650 million in cash, including a commitment of $135 million from Koch Strategic Platforms, Riverstone Energy Limited, Neuberger Berman and Van Eck Associates Corp. It will value the Boulder, Colorado-based company at $1.2 billion upon closing later this year.

That money will add to the $135 million Solid Power raised in a Series B round last month led by BMW Group and Ford Motor Company and joined by Volta Energy Technologies and Equinor Ventures.

This puts Solid Power ​“in a position of being the only solid-state battery company with a fully capitalized business model,” CEO Doug Campbell said in a Tuesday interview. ​“We do not endeavor to be a mass-producer of solid-state cells. Instead, we seek to partner with other manufacturers of lithium-ion batteries.”

Solid Power says it has proven its ability to manufacture battery cells containing its solid electrolyte to replace the liquid electrolytes used in today’s lithium-ion batteries. It plans to have demonstration batteries available to automaker partners by mid-decade and in full production by 2026.

That’s about in line with the roadmaps of a group of solid-state battery contenders raising money from automakers pursuing all-electric lineups to meet the need for decarbonizing the transportation sector. Volkswagen has invested $300 million in QuantumScape, the San Jose, California–based company that raised $1 billion and hit a $13 billion valuation in its SPAC completed in December. General Motors led a $139 million Series D round for SES (formerly SolidEnergy Systems) in April.

But Campbell differentiated Solid Power’s technology from other companies in the field. QuantumScape recently acknowledged to Bloomberg that it uses some liquid materials in the form of a gel polymer. SES produces lithium-metal materials, cells, modules and recycling processes, but ​“would not advertise them as solid-state,” he said.

Solid Power’s technology, by contrast, can be integrated into existing battery manufacturers’ processes at scale, he said. The company intends to earn revenue by selling the materials that go into those cells, as well as through licensing its technology or perhaps forming joint ventures with those partners, he said.

Solid lithium-metal electrolytes could significantly increase the energy density of batteries, as well as reducing the risk of thermal runaway that can cause lithium-ion batteries to catch fire and explode. Those are highly sought-after characteristics for automakers seeking range, safety, cost and weight improvements for an expanding class of electric vehicles.

At the same time, the pursuit of solid-state batteries is just one of a dizzying array of approaches being considered to improve the performance, cost and safety of a class of batteries that has grown to dominate the consumer electronics, automotive and stationary energy storage markets.

New battery chemistries using lower-cost and more efficient materials that can fit into existing battery designs may be able to come to market sooner than solid-state designs. These include the silicon anodes being developed by companies like Sila Nanotechnologies and Sionic Energy to replace the graphite anodes used today.

Solid Power told Canary Media last month that its megawatt-hour-scale production line in Boulder mirrors the inputs and processes used in full-scale battery manufacturing. Jeff Chamberlain, founder and CEO of Volta and a veteran of the U.S. Department of Energy’s Argonne National Laboratory, called the company ​“the only all-solid-state battery company that is not a science experiment.”

Solid Power is the latest of a rising number of clean technology startups using the SPAC route to go public, including fellow solid-state battery contender QuantumScape, zinc-based battery manufacturer Eos Energy, flow battery maker ESS, and battery installer and aggregator Stem. SPACs have also proven to be an attractive route for a host of electric vehicle startups including Lordstown Motors, Fisker Automotive and Nikola Motors, as well as EV charging providers such as Proterra, EVgo, ChargePoint, Nuvve and Tritium.

These types of reverse mergers were once the domain of penny stocks and companies traded over the counter; they were viewed skeptically by investors concerned with the lack of disclosure of underlying financial fundamentals as compared to the more traditional approach of mounting an initial public offering. But SPACs have become a favored vehicle for going public in the past few years for clean technology startups seeking capital to scale up rapidly in the face of aggressive decarbonization initiatives.

Even so, the SPAC route has proven problematic for many companies. Bloomberg reported last month that five EV makers that reached a collective $60 billion in valuation in their post-SPAC peaks have since lost $40 billion of that market value. Lordstown Motors and Nikola Motors have seen top executives resign amid public accusations of fraud from short-seller Hindenburg Research and growing evidence that they lack the capital to start producing vehicles to compete with global automakers.

The fate of next-generation battery companies is harder to predict, given that it will take them years to scale up to full commercial production. QuantumScape saw its share price fall by 10 percent in April after a short-seller publicly accused it of falsifying or obscuring its battery performance data, a charge the company has denied.

(Article image courtesy of Solid Power)