QuantumScape (NASDAQ: QS), a developer of solid-state batteries, went public through a merger with a special-purpose acquisition company (SPAC) on Nov. 27, 2020. Its stock opened at $24.80 on its first day, but it now trades at about $7. Like many other SPAC-backed start-ups, it disappointed its investors by overpromising and underdelivering.
QuantumScape’s lithium-metal batteries, which use solid electrolytes rather than liquid ones, offer better thermal stability, shorter charging times, and higher charging capacities than their lithium-ion counterparts. Its QSE-5 battery, which it co-developed with Volkswagen (OTC:VWAP.Y), has an energy density of 844 Wh/L (watt hours per liter) and can be rapidly charged from 10% to 80% in 12.2 minutes. Most lithium-ion batteries for EVs have an average energy density of 300-700 Wh/L with a fast-charging time of 20 minutes to an hour.
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That sounds like a huge leap forward for EVs, but those solid-state batteries are also more challenging to manufacture and more expensive to produce. Before its public debut, QuantumScape claimed it could commercialize its first batteries in 2024. But as of this writing, it’s only shipped some samples and hasn’t commercialized any of those batteries yet.
That’s why QuantumScape is a difficult stock to value. The bulls claim it will grow into that valuation as it finally commercializes its first solid-state batteries, but the bears believe its business will fizzle out before that happens. Let’s see which scenario is more likely to occur and where its stock might head over the next three years.
QuantumScape originally planned to manufacture its own batteries via a joint venture with Volkswagen. But in 2024, it abandoned that capital-intensive strategy and licensed its technology to Volkswagen’s battery subsidiary,…
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