QuantumScape (NYSE:QS) stock was up more than 13% this morning on speculation that it could be a beneficiary of Apple’s (NASDAQ:AAPL) own electric vehicle. Reuters earlier reported the iPhone maker could start production on its own EV as soon as 2024.
Okay, so what is there to speculate about? In a word: batteries. QuantumScape makes them and if Apple makes an EV, the cars will need them. According to the report, Apple’s EV would be powered by a monocell battery design that provides greater range than traditional EV batteries. It is also reportedly exploring the use of a lithium iron phosphate battery.
QuantumScape’s solid-state lithium batteries are seen by many experts as superior to competing products. Recently released performance data demonstrated that QS batteries perform exceptionally well in terms of charge time, cycle life, safety and operating temperature.
Who Is Behind QS Stock?
You may recall that QS stock is the successor of a SPAC merger with shell company Kensington Capital. That deal combined two of the year’s hottest investment trends: special purpose acquisition companies (SPACs) and electric vehicles (EVs).
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.”
InvestorPlace contributor Chris Markoch perfectly summed up the importance of QuantumScape’s product offerings when he wrote, “… lithium-ion batteries are the Achilles heel of the EV revolution. And that heel will only get more exposed as demand for electric vehicles increases.”
Is QuantumScape Still Reasonable?
QS stock was already red-hot even before the Apple speculation fired up. After the merger closed, QuantumScape stock went parabolic. After recently hitting a then-peak of $76, contributor Ian Bezek called the valuation “absurd and unjustified.” And that was before any hint of an Apple “iCar.” Now it looks set to open Tuesday at around $110 per share.
Investors who aren’t already holding QuantumScape stock would be taking on a great deal of risk at these rumor-fueled levels.
Look at Apple as a better choice right now. It made today’s list of the seven best stocks to buy now as political winds and investor sentiments shift at the close of 2020.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.