Volkswagen to Invest Up to $200 Million in Silicon Valley Battery Developer QuantumScape

author: Eric Walz   

As automakers around the world forge new partnerships with tech companies, Silicon Valley is becoming an emerging hub of innovation for the auto industry, as carmakers from around the world partner with tech companies to develop new technologies for future vehicles, such as self-driving cars and advanced batteries for electric vehicles.

Volkswagen announced today that it's increasing its stake in Silicon Valley solid-state battery developer QuantumScape. The automaker is making an additional investment of up to $200 million in the company. The goal of the latest investment is to further develop solid-state batteries for Volkswagen's future EVs. 

The closing of Volkwagen's investment is still subject to customary review.

Volkswagen joins Toyota, BMW, Mercedes Benz, Ford, General Motors and others that have formed new partnerships with promising companies in Silicon Valley to develop new technologies for their future models. 

Quantumscape was founded in 2011 and is headquartered in San Jose, California. The company holds around 200 patents and patent applications related to solid-state battery technology. 

Volkswagen and QuantumScape have been collaborating since 2018 in a joint venture to enable industrial-level production of solid-state batteries. Volkswagen invested $100 million in the joint venture. 

Solid-state batteries promise improved safety and faster charging times for EVs compared to the lithium-ion batteries currently in use. This battery technology has further advantages over the present lithium-ion technology, including higher energy density, which translates into longer ranges for electric vehicles.

A solid-state battery of the same size as a standard EV battery can achieve a range comparable to that of combustion engine vehicles. However, developments in solid state battery technology have been slow. To date, no other battery supplier has been able to achieve performance sufficient for mass-production. But the technology shows promise.

"We are making technological progress with our partner QuantumScape. The additional investment will effectively strengthen and accelerate our joint development work", said Thomas Schmall, Chairman of the Board of Management of Volkswagen Group Components, which has end-to-end responsibility for developing EV batteries for the automaker. 

As the auto industry shifts towards electric vehicles, global automakers are pouring billions into research and development of new electric models, hybrid technology and other e-mobility services. 

In November 2019, Volkswagen said its was investing 33 billion euros (US$37 billion) by 2024 to develop new electric and hybrid vehicles. 

In order for VW's plan to be successful, the company requires a reliable and steady source of batteries. The company is actively securing supply deals with global battery makers, including Chinese battery maker CATL, also a supplier to Volkswagen's rival BMW.

In September 2019, Volkswagen and Swedish battery maker Northvolt established a joint venture to prepare for the large-scale production of lithium-ion batteries in Germany.

"We are securing our global supply base with efficient producers, gradually building up manufacturing capacities and driving the development of cutting-edge solid-state battery technology. Our focus in this context is on long-term strategic partnerships," said Frank Blome, Head of the Battery Cell business, Volkswagen Group Components.

Volkswagen has an aggressive timeline to build up to 22 million electric vehicles over the next decade and like its rival automakers, the company will require deals with global battery manufacturers to achieve its goal.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.