It’s amazing how quickly things change in the markets. Back in November I profiled shell company Kensington Capital and KCAC stock. Since that time, Kensington merged with QuantumScape (NYSE:QS), KCAC stock has vanished, and QuantumScape stock is trading with heavy daily volumes.
So now, we have a relatively new electric-vehicle stock that came to the market via a special purpose acquisition company (SPAC). There have been plenty of those in 2020, so what’s special about QuantumScape stock in particular?
For one thing, QuantumScape doesn’t sell electric cars. That’s probably good news for the owners of QuantumScape stock who don’t want to worry about competition from the likes of Tesla (NASDAQ:TSLA) or Nio (NYSE:NIO).
Instead of manufacturing vehicles, QuantumScape develops a specific class of products that electric-car companies will need generally. It could even be argued that QuantumScape is a true innovator in its niche. So, let’s delve into the brief but fascinating history of QuantumScape.
A Closer Look at QuantumScape Stock
QuantumScape’s shares debuted on the New York Stock Exchange on Nov. 27 amid much buzz and fanfare. It was an auspicious start after the SPAC merger had provided QuantumScape with roughly $650 million in funding.
Early investors in QuantumScape stock were rewarded with quick, strong returns. On Dec. 9, the stock – which had been trading in the $30s not very long ago – catapulted to an eye-popping, 52-week high of $87.50.
I always try to dissuade investors from chasing stocks after a fast vertical move. QuantumScape stock provides a textbook example of this as the share price rapidly declined after its Dec. 9 peak.
In pre-market trading, QuantumScape stock is changing hands for around $65 . That seems like a pretty good entry point for folks who’ve been waiting for a better price.
But then, it’s only a worthy investment if you truly believe in the company. Now we’ll take a deeper dive into QuantumScape’s business model.
CEO Jagdeep Singh founded QuantumScape in 2010. Based in San Jose, California, Singh’s company develops next-generation, solid-state lithium-metal batteries.
QuantumScape has some pretty impressive backers for a relatively small start-up. For one thing, the company is backed by Bill Gates, who said that QuantumScape has resolved lithium’s problems.
According to Volkswagen CEO Herbert Diess, “Volkswagen has become the largest shareholder of QuantumScape… One of the
long-term targets is to establish a production line for solid-state batteries by 2025.”
Thus, it appears that QuantumScape will continue to be an integral part of Volkswagen’s big plan to invest roughly $38 billion in electric mobility by 2024 and to produce 22 million electric vehicles by 2029.
Batteries for the Future
You might already be convinced that developing batteries that will be used in electric vehicles is a good business model.
Yet you may want to know what makes QuantumScape’s solid-state lithium batteries superior to competing products. Fortunately, the company recently released performance data demonstrating that QuantumScape’s batteries perform exceptionally well in terms of charge time, cycle life, safety and operating temperature.
Here are the relevant stats:
- Charges to 80% capacity in 15 minutes
- Up to 80% longer range compared to today’s lithium-ion batteries
- High rate of lithium deposition of up to a micron per minute
- Long cycle life of greater than 800 cycles
- Zero excess lithium
- Tested to -30 degrees Celsius
- QuantumScape’s solid-state separator is noncombustible (an important safety feature)
Venkat Viswanathan, a battery expert and professor of materials science at Carnegie-Mellon University, summed up his overall impression succinctly, saying, “These results blow away what was previously thought to be possible in a solid-state battery.”
The Bottom Line
The terrific test results for the company’s solid-state lithium batteries underscore the strong value proposition of QuantumScape stock.
In the final analysis, Singh’s vision offers the owners of QuantumScape stock the prospect of long-term profits. But best of all, the company could revolutionize electric-vehicle technology as we know it.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.