QuantumScape Battery leases big north San Jose site

Rental deal more than doubles space battery company occupies in the city

SAN JOSE >> QuantumScape Battery has leased a vast building in north San Jose to accommodate a major expansion for the tech company and an early-stage production line for its cutting-edge lightweight battery.

The company has signed a deal to rent a building on Automation Way in San Jose that is more than double the space that it currently occupies in the Bay Area’s largest city.

“The story of QuantumScape is a critically important one because they are leading an industry that will literally drive the future of transportation on our planet,” San Jose Mayor Sam Liccardo said in an interview.

QuantumScape Battery, which is a subsidiary of QuantumScape, leased 196,600 square feet at 1710 Automation Way from Exeter Property Group, according to a filing with the Securities and Exchange Commission. The lease was signed on April 2, an SEC filing shows.

The lease is a long-term rental agreement. It’s scheduled to begin in December 2021 and is slated to expire in September 2032, the SEC filing shows.

San Jose-based QuantumScape is attempting to develop a lithium-metal battery that could represent a breakthrough for batteries in electric vehicles. QuantumScape says its new battery can charge faster, hold more power, and last longer than other batteries for electric cars.

The new research and manufacturing site is dramatically larger than QuantumScape’s current headquarters at 1730 Technology Drive in San Jose.

The Technology Drive location, which totals 87,100 square feet, is the company’s only site, according to a QuantumScape annual report that was filed in February. QuantumScape’s lease at Technology Drive is slated to expire in January 2023, an SEC filing shows.

“Most of the facility is used for our research and development and prototype manufacturing,” QuantumScape said in the annual report, in a reference to the headquarters site.

QuantumScape, however, stated in the annual report that it was seeking to accomplish a major expansion of its operations, a goal that was satisfied with the lease of nearly 197,000 square feet on Automation Parkway.

“We are seeking to lease an additional facility of approximately 200,000 square feet in order to install a prepilot production line to increase production for internal engineering and customer samples,” QuantumScape stated in the annual report.

QuantumScape is working in a major alliance with automotive titan Volkswagen. In 2018, Volkswagen invested $100 million in QuantumScape.

“By increasing its stake in QuantumScape and forming a new joint venture, Volkswagen Group is paving the way for the next level of battery power for long-range e-mobility,” Volkswagen said in the 2018 announcement.

In June 2020, Germanybased Volkswagen announced an additional investment of $200 million in QuantumScape.

“The goal is to drive forward the joint development of solid-state battery technology,” Volkswagen said in disclosing its expanded stake in QuantumScape. “Solid-state batteries are expected to significantly increase range and shorten charging times further.”

Bill Gates, Microsoft’s cofounder, is another major backer of QuantumScape.

In November 2020, QuantumScape orchestrated an initial public offering that raised $680 million and valued the battery company at $3.3 billion.

In March 2021, Volkswagen announced that it had successfully tested the lithium metal batteries developed by QuantumScape in the vehicle maker’s labs in Germany. The tests were deemed to be a major step forward on the road to mass production of the batteries for electric vehicles.

“We look forward to working jointly to bring solidstate lithium-metal battery technology into industrialized mass-production,” Jagdeep Singh, QuantumScape’s chief executive officer and co-founder, said in March in connection with the Volkswagen disclosure regarding the battery tests.

At the end of December, QuantumScape employed 276 full-time employees, according to a regulatory filing. The new facilities could bolster a big increase in staffing in San Jose.

“The lease shows that San Jose continues to be a place where innovation happens and expands,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.

The QuantumScape expansion could represent a welcome counterpoint to negative reports about an exodus of companies from Silicon Valley and the Bay Area.

“Headlines tend to focus on who is moving headquarters,” Liccardo said. “But the reality of job creation in Silicon Valley is about smaller companies growing in this place, much more than about companies moving in or out of this region.”

In recent months, Oracle and Hewlett Packard Enterprise said they would shift some operations from the Bay Area to Texas.

“QuantumScape has bigname investors and grand aspirations,” Liccardo said. “We are thrilled to see QuantumScape continue togrowhereinSanJose.”