VW Said to Buy Battery Startup Stake for Tesla Challenge

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VW CEO Martin Winterkorn
Winterkorn sees new battery technology possibly boosting the range of electric vehicles "to as much as 700 kilometers (430 miles),” Photographer: Simon Dawson/Bloomberg

Volkswagen AG bought a stake in battery startup QuantumScape Corp. with the aim of developing technology that can more than triple the range of its electric cars, according to people familiar with the matter.

VW is considering using the energy-storage technology, which is fireproof, for vehicles from the namesake brand as well as Porsche and Audi, said the people, who asked not to be identified because the plans are private. Tests to show the system is viable for cars are due to be completed in mid-2015, they said. The VW of America unit bought a 5 percent holding and has options to raise the stake, one of the people said.

Boosting battery capacity and improving safety could help Volkswagen, the world’s second-largest automaker, gain a technological edge over Tesla Motors Inc., the Palo Alto, California-based electric-car producer led by billionaire Elon Musk. Tesla came under scrutiny by regulators last year after fires involving the Model S sedan.

Peter Thul, a spokesman at Wolfsburg, Germany-based VW, declined to comment on any investment. Calls to the main switchboard and an e-mail to San Jose-based QuantumScape seeking comment weren’t answered. Financial details of the company weren’t available.

Solid-State Technology

Closely held QuantumScape is working on solid-state batteries as an alternative to liquid electrolytes such as the lithium-ion technology used in many electric cars today. Solid electrolytes are burn resistant and could potentially store more energy and provide more power to extend the range of electric vehicles.

QuantumScape, founded in 2010 by former Stanford University researchers, has 12 job openings, according to a LinkedIn profile for the company. In the job listings, QuantumScape says it’s “working on a fundamental disruption in the field of energy storage.”

“I see great potential in this new technology, possibly boosting the range to as much as 700 kilometers (430 miles),” VW Chief Executive Officer Martin Winterkorn said in a Nov. 6 speech at Stanford University in California. That’s more than three times the range of the battery-powered version of the VW Golf. Tesla’s Model S has a range of 265 miles, according to its website.

While demand for electric cars remains tepid, the technology is critical for meeting tightening emissions regulations, especially for luxury-car manufacturers such as VW, BMW and Mercedes-Benz. Volkswagen’s increased focus on electric cars would put pressure on Tesla to maintain its sales lead.

The German automaker employs about 44,000 research and development engineers and spends $13 billion a year on new technology. Tesla’s entire workforce totaled about 5,800 employees at the end of 2013, and research and development expenses were $280 million in the first nine months of 2014.

“Electro-chemistry is a field of the greatest importance internationally and across industries,” and is “a field where we can and must achieve progress,” Winterkorn said in the speech. In July, he said the company had invested in a battery-technology company without providing details.

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