Solid Power IPO: Advancing Solid-State Battery Technology

Solid Power's Public Market Debut

Solid Power, a developer of solid-state batteries with backing from both Ford and BMW, experienced a significant increase in its stock price immediately following the start of trading on Thursday.

The company represents one of several within the electric vehicle sector to enter the public market through a merger with a special purpose acquisition company (SPAC).

Merger Details and Funding

In June, Solid Power announced its merger with Decarbonization Plus Acquisition Corp III. This deal established a post-merger market valuation of $1.2 billion for the company.

The transaction ultimately provided Solid Power with approximately $542.9 million. This figure is close to the projected $600 million, due to a remarkably low rate of redemptions before the shareholder vote.

This funding includes $195 million from a private investment in public equity (PIPE) and $347.9 million held in trust.

The Promise of Solid-State Technology

These funds are crucial as Solid Power works to commercialize what it believes will be the world’s first solid-state battery designed for electric vehicles.

Solid-state batteries, distinguished by their use of a solid electrolyte instead of a liquid one, are widely considered a potential breakthrough in battery technology.

Developers assert that these batteries mitigate the fire hazards associated with traditional batteries by removing the flammable electrolyte. They also offer the potential for increased energy density, translating to greater vehicle range.

Production and Testing Plans

Solid Power has been actively expanding its manufacturing facility in Colorado.

Pilot production of its commercial-grade, 100 ampere battery cells is scheduled to begin in early 2022. These cells will then be provided to Ford and BMW for rigorous automotive testing.

The company intends to utilize the capital from the merger to support operations through the vehicle integration phase, which is currently anticipated to occur in 2026.

Business Strategy: Licensing, Not Manufacturing

Solid Power’s long-term strategy diverges from that of large-scale battery manufacturers like LG Chem and SK Innovation.

The company aims to license its battery cell technology to original equipment manufacturers (OEMs) and other manufacturers.

As CEO Doug Campbell stated earlier this year to TechCrunch, “Long term, we’re a materials company.” He further explained their goal is to become the leading provider of solid electrolyte materials.

Competition in the Solid-State Space

Solid Power is not alone in pursuing solid-state battery technology and utilizing the SPAC route to go public.

Major automotive manufacturers are investing in multiple companies in this field, with Volkswagen and Stellantis backing QuantumScape, and Mercedes-Benz supporting Factorial Energy.

SPAC Market Volatility

QuantumScape completed its SPAC merger in November 2020.

Like other electric mobility SPACs, it experienced considerable stock price fluctuations, peaking at $114 in December before stabilizing around $20-25.

It remains to be seen whether Solid Power’s stock will encounter similar volatility. The company is currently trading under the ticker symbol $SLDP.