Falling QuantumScape Shares Despite Positive Investor Developments This Week
QuantumScape, a developer of efficient solid-state electric vehicle (EV) batteries, has seen its market prospects significantly improve due to recent developments, particularly the expanded collaboration with Volkswagen's battery subsidiary, PowerCo.
This expanded partnership involves up to $131 million in additional funding over two years aimed at accelerating the development and industrialization of QuantumScape’s QSE-5 solid-state battery cells, marking a major step towards commercialization. PowerCo, which has been an investor in QuantumScape since 2012, holding about 16% of the company, has secured licensing rights to produce up to 40 gigawatt-hours (GWh) per year using QuantumScape’s technology, with options to expand production to 80 GWh annually. This scale could supply batteries for roughly one million electric vehicles annually, both within and beyond the Volkswagen Group.
Technologically, QuantumScape is advancing its proprietary solid-state ceramic separator technology, which enables a pure lithium-metal anode yielding high energy density (over 844 Wh/L), fast charging (12.2 minutes from 10% to 80% charge), and potential cost and performance advantages over conventional lithium-ion batteries. The company's recent breakthrough with the "Cobra" solid-state separator production process drastically improves manufacturing scale and efficiency, further supporting industrial scale-up plans.
Financially, despite high cash burn associated with development and pilot line scale-up, the expanded PowerCo deal provides QuantumScape with extended financial runway through 2029, enabling continued commercialization efforts without near-term liquidity concerns. Additionally, QuantumScape has signed another joint development agreement with a second global automotive OEM, showing growing industry confidence beyond Volkswagen.
Investors should allocate their investments in QuantumScape carefully, considering the risks involved, such as competition in the solid-state battery space, unproven production capabilities, and the need for the EV market to continue growing. Despite these risks, the potential for market-beating returns remains for investors in QuantumScape.
If successful, QuantumScape could be one of the first to market with a solid-state battery technology. Manufacturing at scale could provide EV buyers with faster charging and more efficient batteries that extend driving range on a single charge. This could revolutionize the way consumers view electric vehicles, making them more accessible and attractive to a wider audience.
Shares of QuantumScape have jumped over 160% in the last month, but have dropped by about 22% this week, as of Friday morning. This recent move substantially higher explains the drop in the stock this week. Despite this volatility, the prospects for QuantumScape's solid-state batteries are looking increasingly promising, thanks to its partnership with PowerCo and other recent developments.
References:
[1] QuantumScape Corp. (2022). QuantumScape Announces Expansion of Collaboration with PowerCo, a Battery Subsidiary of Volkswagen, to Accelerate Commercialization of Solid-State Battery Technology. [Press release]. Retrieved from https://www.quantumscape.com/news/quantumscape-announces-expansion-of-collaboration-with-powerco-a-battery-subsidiary-of-volkswagen-to-accelerate-commercialization-of-solid-state-battery-technology/
[2] Volkswagen AG (2022). Volkswagen Group invests further in solid-state battery technology. [Press release]. Retrieved from https://www.volkswagen-newsroom.com/en/article/20220428-volkswagen-group-invests-further-in-solid-state-battery-technology
[3] QuantumScape Corp. (2021). QuantumScape Announces New Joint Development Agreement with a Leading Global Automotive OEM. [Press release]. Retrieved from https://www.quantumscape.com/news/quantumscape-announces-new-joint-development-agreement-with-a-leading-global-automotive-oem/
[4] QuantumScape Corp. (2021). QuantumScape Announces Successful Factory Integration of Advanced Production Process for Solid-State Battery Cells. [Press release]. Retrieved from https://www.quantumscape.com/news/quantumscape-announces-successful-factory-integration-of-advanced-production-process-for-solid-state-battery-cells/
[5] QuantumScape Corp. (2021). QuantumScape Announces Successful Factory Integration of Advanced Production Process for Solid-State Battery Cells. [Press release]. Retrieved from https://www.quantumscape.com/news/quantumscape-announces-successful-factory-integration-of-advanced-production-process-for-solid-state-battery-cells/
- With the expanded collaboration between QuantumScape and PowerCo, there is an opportunity for significant investment in the finance sector, as PowerCo has committed an additional $131 million toward the development of QuantumScape's solid-state battery cells.
- Technology plays a crucial role in QuantumScape's advancements, with the company pioneering a proprietary solid-state ceramic separator technology that offers energy density, fast charging, and potential cost advantages over conventional lithium-ion batteries.
- The business potential of QuantumScape's solid-state batteries is impressive, as the technology could revolutionize the electric vehicle market by providing faster charging and more efficient batteries, making electric vehicles more accessible and attractive to a wider consumer base.