Nickel Is About to Take a Back Seat at QuantumScape HQ

QS Stock - Nickel Is About to Take a Back Seat at QuantumScape HQ

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There is no question QuantumScape’s (NYSE:QS) news at the end of April that its 16-layer solid-state cell was capable of 500 charge cycles was good to hear if you’ve owned QS stock for any length of time. 

However, another piece of news might have far more significance for shareholders as the company moves closer to commercializing its electric battery cells. In 2022, QuantumScape is expected to spend between $325 million and $375 million on its Phase 1 and Phase 2 engineering lines and its QS-0 pre-pilot production line.  

Two metals used in producing these electric batteries are nickel and lithium. They’re up 80% and 414%, respectively, over the past year. However, iron ore prices are down 24% in the same period, and they’re much cheaper by the ton.

So, nickel could take a back seat to iron. 

QS Stock and Iron-Based Batteries

According to CEO Jagdeep Singh, QuantumScape could use iron-based cathodes — instead of nickel-based — with its lithium-metal anodes, delivering superior energy efficiency. 

“‘[W]e’re cathode-agnostic with our architecture, so we can switch from nickel to iron,’ Bloomberg Quint reported Singh said. ‘When you couple iron-based cathodes with our lithium-metal anode, you get a 50% increase’ in energy density, he added, so that makes them a ‘viable alternative’ to nickel.”

The latest price for nickel is $31,722 per ton, while a ton of iron ore is $142. Now, you don’t have to be a rocket scientist to understand that if the battery could be more energy efficient while cheaper to produce, that’s a win/win solution for QuantumScape. 

Iron-based Batteries Already in Use

According to October 2021 reporting by Bloomberg, CSB Energy, a clean-energy firm based in Taiwan with U.S. operations in Texas, manufactures iron-flow batteries for energy storage. Made of iron, salt, and water, they cost $200 per kilowatt-hour (kWh) compared to $350 kWh for lithium-ion batteries, and they’re likely to get even cheaper.

Of course, these batteries are too large for automobiles, but it demonstrates that what Singh is suggesting isn’t a pie-in-the-sky theory. Iron-based batteries actually work and, in the case of energy storage, do a better job.

So, if you’re like me and concerned about QuantumScape’s rising costs, this latest revelation means cheaper solid-state batteries could be on the way sooner than you think.

That’s excellent news if you own QS stock.     

On the date of publication, Will Ashworth 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 Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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