After Hindenburg Research debunked and short-sold Nikola and Lordstown Motors, we were asking which company they would chase in the EV world. Surprisingly, another research company – Scorpion Capital – emerged, claiming that QuantumScape is a “pump-and-dump SPAC scam” that made “Theranos look like amateurs.” The solid-state battery startup felt the punch with a 15 percent stock devaluation, but it fought back.

Scorpion Capital said QuantumScape’s claims about its solid-state technology are fraudulent and misleading. It interviewed nine ex-employees from QuantumScape, and all of them would have said that the solid-state battery would take at least ten more years to reach the market if the science behind them was real.

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According to some of these former employees, Jagdeep Singh would be a competent salesman exaggerating what he is trying to sell: achieving a solid-state ceramic separator immune to dendrite formation.

Scorpion Capital interviewed solid-state specialists who said QuantumScape presented data that is not relevant to prove the company is on the right path. It raised six major red flags about the company’s technology: resisting dendrites, working at low temperatures, fast charging to 80 percent of capacity in 15 minutes, cycle life, the battery life in low temperatures, and the aggressive automotive power profile it would have to endure.

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Among the allegations, it states that QuantumScape tested with a coin-sized sample with a single layer, which would not present dendrite issues as much as a larger cell. QuantumScape would also have heated the samples to 45ºC to melt dendrites.  What we heard from QuantumScape was quite the opposite: the company wanted to show its solution worked at lower temperatures than other solid-state battery researches.

It is a fact that QuantumScape is protective of its technology. In an article written by Bloomberg, it asked the photographers to use a filter not to disclose the real color of its ceramic separator. It also revealed the cathode has some liquid, making it not as solid as the company previously claimed. Revealing anything else could jeopardize what the company achieved.


In its response to Scorpion Capital, QuantumScape used the report’s legal disclaimer to present the conclusions as something necessary for the research company to make a profit. Hindenburg’s reports first presented the data and said that, due to the conclusions, it was shorting the companies the reports were about. In other words, the short position was due to the conclusions, not the other way around.


QuantumScape also quotes how Scorpion Capital takes no responsibility for what the people it interviewed said, how it mentioned these guys could have outdated information, and how it selected what to report. 


Scorpion Capital argues that the main reason for people to believe QuantumScape is the fact that Volkswagen is an investor – smart money lending “credibility to the scam.” That brings up how GM did so for Nikola, was accused of not doing its due diligence, and backed away from the deal it had with the fuel cell startup.

QuantumScape stressed that Volkswagen is an investor because its cells met technical milestones. That made the German manufacturer invest $100 million more in QuantumScape last month. It is worth mentioning the Volkswagen Power Day also included information from QuantumScape. If the company had not done its due diligence, it would probably be trying to find a way to get rid of the solid-state startup.



Finally, QuantumScape said it would not speak about the report anymore and would go back to work instead, letting its achievements speak for themselves. 

It seems the market wants more evidence that what QuantumScape has will really bring the revolution the company promises. On April 15, when the report was released, the stock price fell to $34.22 but closed at $35.85. On April 16, the stock price was around $34.60 when this article was published. On April 14, before the Scorpion Capital report, it closed at $40.85.

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