Developers in the next-generation battery space are making significant strides, but is it wise to invest now?
Electric vehicles and associated stocks are navigating a challenging environment. A notable example is battery manufacturer QuantumScape, whose stock has seen considerable fluctuations this year. Last year was quite promising for the company as it made notable advancements in battery technology.
The stock peaked at $19 per share last October, but it’s now down 63% from that high. Currently trading below $9 per share, one might wonder if now’s the time to consider QuantumScape as a potential investment. Let’s dig a bit deeper into the company and its developments.
QuantumScape Achievements in Battery Tech
The last year has been productive for QuantumScape, especially regarding battery technology innovations. A major milestone was the implementation of the Cobra separation process into their baseline cell production in the second quarter. This new manufacturing method improves heating speed by 25 times compared to their previous Raptor process and occupies much less floor space, inching closer to mass production of batteries.
In the third quarter, the company began sending out samples of their QSE-5 B1 cells, which utilize separators produced using the Cobra method, to automotive partners. These cells exhibit an energy density of 844 Wh/L and 301 Wh/kg, meaning they are smaller and lighter than current technologies. Additionally, they can charge from 10% to 80% in just 15 minutes—addressing a significant drawback of electric vehicles.
Moreover, the company has broadened its partnership with PowerCo, the battery division of Volkswagen. This collaboration includes a non-exclusive license for the mass production of up to 40 GWh of battery cells annually, with the potential to double that. They’ve also entered into joint development agreements with Murata Manufacturing and Corning to mass produce ceramic separators for all-solid-state batteries, building a global supplier network as they prepare for scaled production.
What Lies Ahead for QuantumScape?
This year, QuantumScape plans to start testing QSE-B1 sample cells in vehicles as part of a rollout program to showcase the technology’s real-world performance. For the entire year, they predict an adjusted EBITDA loss between $250 million and $275 million.
Looking further down the road, their ambition is to collaborate with Volkswagen and PowerCo to have a production vehicle utilizing their technology on the market by 2029. In the interim, the company must continue testing, scaling manufacturing, and establishing its supply chain.
The management believes that they have enough cash to last into the late 2020s, which is crucial since raising capital can dilute shares. However, it’s worth noting that the company is several years away from seeing substantial revenue. For now, many investors might be best off steering clear of this stock, as it remains speculative and driven by future promises.
