Judge QuantumScape Not on Its Current State, but on Potential

The future of transportation is here, and it’s electric. QuantumScape (NYSE:QS) has developed an innovative new battery technology that could revolutionize the way we think about cars. It will also help drive up the price of QS stock.

A QuantumScape sign at the company's headquarters.
Source: Michael Vi/Shutterstock.com

Solid-state batteries are more powerful than current models with longer life spans, all without any danger or risk associated with handling them than with lithium-ion chemistries currently in use.

QS is leading the field in solid-state batteries and has been for years. The company was founded to commercialize this technology. At the moment, they can make progress on their plans without depending too heavily upon other organizations’ help or funding sources like venture capital firms who typically only invest after startups demonstrate that there’s potential moneymaking opportunity ahead of them (and even then sometimes).

It certainly helps to have a company like Volkswagen (OTCMKTS:VWAGY) as a partner. The relationship between the German automaker and QuantumScape is a strategic one. Volkswagen will be launching more than 70 electric models in just 10 years instead of the 50 previously planned.

QS has the chance to change how we all view electric vehicles with their disruptive technology and advanced components. So it is important to value QS stock based on the potential rather than current fundamentals.

One for the Future

The leader in battery technology, QuantumScape, has always been at the forefront of innovation. Solid-state batteries are the future of energy storage. And compared to peers, this company has a solid team working on them. Their innovative technology could lead to potential contracts with other OEMs in need. Many companies have been investing large sums of money into R&D to develop these batteries. Still, no one can beat QuantumScape in terms of progress. The company invested millions and is now among the best picks in the EV space.

The QuantumScape team is excited to show off some of their early work in progress finally. The single-cell battery is showing encouraging results. And it’s most likely going into production very soon. The fast-charging capacity and low weight make them perfect for portable electronics. They can store up to 80% more power than traditional lithium-ion technology, making these devices last much longer on a single charge without worrying about running out before you need it most, whether that’s during your morning commute or when charging at home.

The only major competition out there for the company is Samsung Electronics (OTCMKTS:SSNLF). They also operate with a Lithium Metal Anode and have managed to publish successful preliminary results. However, the high temperature of this battery worries me about its long-term efficiency and if it will be prone to overheating due to prolonged use.

One of the best features of QuantumScape batteries is that they can operate at very low temperatures. It allows them to have greater energy density and helps prevent overheating. All of these elements will have major implications for consumer products.

Battery Updates Help the Bull Case

The four-layer battery from QuantumScape has produced some promising early results. This is a more dense lithium-ion cell with four unique layers, each containing cycling metal chemistry and ceramic electrolyte separators for increased power density. The battery could use it in electric vehicles or larger industrial machines like fans where current demand exceeds capacity on single-layer cells without sacrificing weight savings through smaller sizes.

The performance of the battery under low-temperature environments is encouraging and one of many promising results from testing. The life span has been impressive so far, with 450 cycles completed. However, we need to improve this technology to take off as a reliable solution or power source. But it’s a solid base on which to build upon.

QuantumScape’s 10-layer battery is the most exciting technology that the company has to offer. I could see this new energy source powering trucks, heavy-duty commercial vehicles (HDVs), and other heavy machinery and industrial equipment like fans or compressors where batteries are being used for backup purposes only because they have finite lives under specific conditions. The applications of these technologies will be far-reaching with potentials ranging across many different industries, so it might even promote electric vehicle development in its way.

Do Not Focus On the Short Term with QS Stock

The short-term view is often seen as a more achievable goal than the long-term. However, it’s also not very rewarding in the end. When investing in QS stock, you need to decide whether you are interested in this company as a long-term play. If that is the case, this has the potential to become a multi-bagger, as you can see from the number of prominent partnerships already signed.

The battery results only add icing to an already enticing cake. For investors, the only problem is when to add this company to your portfolio. As a rule of thumb, whenever there is a dip, you should purchase more of the stock.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

Article printed from InvestorPlace Media, https://investorplace.com/2021/10/judge-quantumscape-not-on-its-current-state-but-on-potential/.

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