QuantumScape (NYSE:QS) stock has dipped in the past few months, shedding more than shed over 20% of its value in the past couple of months.
President Joe Biden’s infrastructure bill allocated a sizeable portion for the EV sector. However, the initial euphoria has now faded away, and QS stock has taken a beating along with the rest of the EV sector.
QuantumScape aims to disrupt the EV industry by commercializing solid-state batteries. The revolutionary technology could be a turning point for the company, promising a safer and more robust than lithium-ion batteries.
These batteries can charge up to 80% capacity within 15 minutes without the risk of fire hazards. Progress so far has been impressive, and if it can continue to nail its milestones, it could offer multi-bagger returns for its investors. Hence, despite the weakness in stock price, QS stock’s long-term case remains intact.
Encouraging Test Results
QuantumScape recently reported some highly encouraging testing results. These tests demonstrated the incredible durability and efficiency of its batteries.
The first test results showed that its batteries have an impressive one-hour charge/discharge cycle, with an 800 cycle charging capacity. It also showed that the batteries can effectively operate under reasonable conditions.
The second test result showed that its batteries could be charged up to 80% within 15 minutes. Moreover, the batteries effectively retained most of their capacity after 400 cycles.
Solid-state batteries are more stable and can charge significantly faster than a conventional lithium-ion battery. They possess a much higher density allowing for a much greater range than their counterparts.
Additionally, QuantumScape states that battery costs are much lower with a solid-state battery as it doesn’t have flammable anode host material.
It’s an interesting time ahead for the company will likely report more test results. In furthering its plans, it has sufficient resources on its balance sheet at this time.
QuantumScape has partnerships and agreements with the most powerful entities, including Volkswagen, Stanford University and others. It also boasts over 200 well-protected patents and a spectacular R&D team.
The Fluence Energy Deal
QuantumScape has signed an agreement with Fluence Energy, an energy storage specialist.
The collaborative arrangement is likely to be a major growth catalyst for both companies. Energy storage is vital for commercializing solid-state lithium metals.
The batteries produced by QuantumScape are likely to have significantly higher energy density and can store more energy than lithium-ion batteries.
For QuantumScape, the deal is likely to have far-reaching implications. Fluence will help significantly increase the company’s battery storage timeline. The long-term collaboration will be vital for the company in achieving its lofty goals.
The battery-maker plans to generate meaningful revenues by 2024, but it’s unlikely to achieve this target without outside support.
It will need to develop healthy relations with OEMs, logistics companies, and equipment producers.
Fluence also will have to foster relationships with multiple enterprises to have a shot at being successful in the testing EV battery market. Moreover, it will also diversify its operations beyond the car battery ecosystem.
Final Word on QS Stock
QuantumScape’s technology is cutting edge, and it has been making some impressive strides of late.
If it can successfully commercialize its technology, it could transform the EV sector forever. So far, it’s been making some incredible progress, based on the recent test results and collaboration agreements.
There are plenty of challenges ahead of it at this time, though, and market volatility likely will test investor patience. Nevertheless, it has a solid foundation to springboard onto greater heights.
Investors in QuantumScape are currently running into a problem called “the Sentiment.” This risk affects both established companies and start-up growth stocks alike, but there is one big difference between them.
The market’s sentiment towards an enterprise can hugely influence which direction their shares go regardless of where fundamentals stand. That seems like exactly what we’re seeing with QS right now as investors adjust down expectations following last month’s 25% sell-off .
To this point, the market has pushed QuantumScape stock purely because it’s a bet on the red-hot EV industry.
QS has signed agreements with three large global automakers, including Volkswagen (OTC:VWAGY). Considering the potential at the heart of this enterprise, this is one name you need in your portfolio.
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. You can check out his analysis on InvestorPlace and TipRanks.