Industry Analysis

Porter’s five forces framework

- Threat of New Entrants: Weak Force

Quantumscape’s business is difficult to compete with. Firstly, it is because of the popularity and
reputation of our partner, Volkswagen. Over the last eight years, QuantumScape has developed a
strong partnership with Volkswagen Group. Volkswagen is one of the largest car companies in the
world and intends to be a leader in electric vehicles. Secondly, QuantumScape has extensive patent
and intellectual property portfolio. It has more than 200 U.S. and foreign patents and patent
applications around their core technology. Their battery technology is protected by a range of
patents covering many fields: material, manufacturing, composition of matter, etc. Therefore, we
consider this is a weak force.

- Bargaining Power of Buyers: Moderate Force

The bargaining power of customers has grown in recent years. There is an increasing competition in
battery field: Tesla and Toyota are also working on solid-state batteries and lithium battery suppliers
such as LG and Panasonic are taking up very high market shares. Therefore, it added to the
bargaining power of customers who want better quality products at affordable prices. Moreover,
QuantumScape is less aggressive in terms of marketing when compare to giant like LG or Samsung.
However, the key is no one in those competitors has ever succeed in developing solid battery, even
in the lab, only QuantumScape did. Therefore, we consider this is a moderate force.

- Threat of Substitution: Moderate force

In today's world there are many different modes of transportation as well as the energy on which
the vehicle depends. The closest replacement for electric cars is a gasoline-internal combustion
engine. Just 2 percent of car sold per year is electrified. Currently, electricity still has many
disadvantages compared to gasoline. Today’s battery doesn’t have the energy density which limits
them in terms of their driving range. Moreover, it recharges slowly and life is not high. Tuy nhiên sản
phẩm của QuantumScape hứa hẹn sẽ khắc phục những điểm yếu này và sẽ sớm trở thành
Therefore, we consider this is a moderate force.

- Bargaining power of suppliers: Strong force

QuantumScape relies on third party suppliers for the components needed to develop and
manufacture solid state batteries including nickel, manganese, cobalt, lithium, and so on. It is
collaborating with key suppliers but have not yet entered into agreements for the supply of
production quantities of these materials. Because there are no guarantees, manufacturers can still
influence production and price pressure on QuantumScape. Furthermore, the price of the raw
materials depends on the supplier, especially nickel because they are very expensive. Any
interruption in the provision of components or materials will temporarily disrupt QuantumScape's
research activities. Therefore, we consider this is a strong force.

- Industry Rivalry: Strong force

There are moderate number of firms operating in battery market like LG, Samsung, Panasonic. The
problem is that these companies have a very high market share in the electric vehicle battery sector.
Many other automotive OEMs are also researching and investing in solid-state battery efforts and, in
some cases, in battery development and production. For example, Tesla, Inc. is building multiple
battery gigafactories and potentially could supply batteries to other automotive OEMs, and Toyota
Motors and a Japanese consortium have a multi-year initiative pursuing solid-state batteries. Also,
 the low impediments for customers to buy cars from other manufacturers (low switching costs)
further strengthen the force of competition. Therefore, we consider this is a strong force.

PESTLE Analysis

- Political: The electric vehicle at this moment is very friendly. Renewable energy technologies
have been boosted by numerous government programs throughout the last few decades. The
dependence on gasoline-powered vehicles has heightened environmental concerns and exposed
consumers to unstable fuel prices and health concerns related to emissions. Many national and
regional regulatory bodies have adopted legislation to incentivize or require a shift to lower-
emission and zero-emission vehicles. For example, countries such as the United Kingdom, the
Netherlands, Sweden, Germany, and France have announced intentions to either increase
applicable environmental targets or outright ban the sale of new ICE vehicles in the next two
decades. More recently, California passed regulations requiring half of trucks sold in the state
to be zero-emissions by 2035 and 100% by 2045.
- Economic: The global economy has just gone through a period of crisis caused by Covid-19.
However, in the future, when we can control this disease, the economy will recover. When
QuantumScape announced the product officially in 2024, the global economy will be likely to
recover and develop higher than it is today. Economic change, coupled with concerns about the
environment, will increase people's purchasing power in the electric vehicle sector. And thus,
QuantumScape's revenue will increase.
- Sociocultural: The largest social factor that is beneficial for QuantumScape is the rising
popularity of low-carbon lifestyles and increasing preference for renewable energy. As Earth’s
climate continues to warm due to greenhouse gasses, environmental conscious consumers look
for green solutions such as electric vehicles. Moreover, users need a better choice than Lithium-
ion battery because the liquid in the battery limits the battery's life and has a high potential for
fire and explosion.
- Technology: QuantumScape is a leader in the development of next generation solid-state
lithium-metal batteries for use in electric vehicles. Its mission is to revolutionize energy storage
to enable a sustainable future. For the past 40 years, no one has been able to make a solid-state
battery that delivers on this promise but QuantumScape. It tests successfully earlier this year.
Battery cells can charge to 80 percent of capacity in 15 minutes and it has a volumetric energy
density of more than 1,000 watt-hours per liter.
- Environmental: The company has opportunities to promote its battery based on concerns on
climate change, expanding environmental programs, and rising standards on waste disposal.
- Legal: This component provides both opportunites and threats. QuantumScape has
opportunities to expand and cooperate overseas because it has reputation as well as many
patents and foreign patents (for more than 200). Currency volatility, trade barriers, tariffs, and
political or economic conditions in certain countries can affect QuantumScape's ability to
expand the business to certain countries.

Outline:

Five forces:

- Threat of new entrants: Weak force

 Popularity of the partner
 Patents and intellectual property
- Bargaining power of buyers: Moderate force
 Increasing competition in battery field
  Less aggressive in terms of marketing
- Threat of substitution: Moderate force
 Recently, gasoline still has advantages over electric vehicles.
- Bargaining power of suppliers: Strong force
 QuantumScape must rely on suppliers from third party.
 Suppliers can interrupt research activities.
 Suppliers are key factors that determine price of raw materials.
- Threat of industry rivalry: Strong force.
 Many strong competitors: LG, Samsung, Panasonic, etc.
 Low switching cost of customers.