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QuantumScape (NYSE:QS), the company pioneering solid-state battery tech, has become the latest victim of an ongoing trend of increasingly blatant short-seller attacks. While we do not want to become a party to this ongoing tussle, we would like to point out a few facts and discrepancies for the benefit of our readers.

Today, Scorpion Capital published a research report against QuantumScape. The short seller’s biggest contention in the report relates to the insufficient information shared by QuantumScape with Volkswagen. Scorpion Capital claims that the solid-state battery manufacturer only shared “nice Powerpoint slides” with the European auto giant. However, this goes against Volkswagen’s own statement!

To wit, about 2 weeks back, QuantumScape announced that it had “met the technical milestone that was a condition to close for [sic] the investment of an additional $100 million by Volkswagen Group of America Investments …”

Scorpion Capital seems to have completely glossed over the statement by the head of the Volkswagen Group’s Center of Excellence Battery Cell, Frank Blome, which was issued at the same time:

"We are pleased to report that the QuantumScape cells met the technical milestones in our labs in Germany that we had previously agreed upon.”

He then went on to say:

“Achievement of this milestone is an important step for QuantumScape and we look forward to receiving and testing subsequent generations of cells, with the goal of getting solid-state technology into series production.”

The crucial part is that the testing of these sample cells from QuantumScape took place in Germany within Volkswagen’s own labs! Therefore, the assertion that the battery manufacturer shared only nice slides with Volkswagen appears to be patently false.

Another red flag in the report is the account of former QuantumScape employees without any timestamp. Former employees are often not the best source of accurate information, having an incentive to disparage their former employers, particularly in the case of a bitter parting. While we wholeheartedly support transparency and call upon QuantumScape to clarify the points raised by Scorpion Capital in its report, we would give them the benefit of the doubt here in the light of such blatant disregard for Volkswagen’s own statements. Moreover, battery tech is a rapidly evolving field where sometimes substantial progress takes place in a matter of months. The account of these former employees, even if true, loses merit without an accompanying time stamp to gauge QuantumScape’s actual level of prowess at that time.

We have raised the issue of QuantumScape’s secrecy before and believe it is high time for the company to adopt a more garrulous attitude. The fact that testing took place on tiny single-layered cells merits further probe. But the point remains that Volkswagen felt comfortable enough while testing these cells in its own labs to unlock an additional $100 million in investment for QuantumScape. This is a solid endorsement for the battery manufacturer, one that Scorpion Capital has conveniently ignored. This story is sure to attract a lot of twists and turns in the coming days. So, stay tuned!