QuantumScape (NYSE: QS), a developer of solid-state lithium metallic batteries, posted its fourth-quarter report on Feb. 12. It did not generate any income because it hasn’t commercialized any of its batteries but. Its internet loss widened 12 months over 12 months, from $110 million to $115 million, or $0.22 per share, however nonetheless beat the consensus forecast by $0.01.
For the complete 12 months, QuantumScape’s internet loss widened from $430 million to $475 million. That state of affairs might sound grim for a corporation with an enterprise value (EV) of $2.2 billion, nevertheless it additionally offered clearer updates for its commercialization efforts.
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Do you have to purchase QuantumScape’s inventory proper now earlier than it lastly ships its first industrial batteries?
Picture supply: Getty Photos.
Why might QuantumScape disrupt the lithium-ion battery market?
Conventional lithium-ion batteries use liquid electrolytes to generate electrical energy. Strong-state batteries use strong electrolytes, that are denser, extra immune to excessive temperatures, and cost extra rapidly than liquid electrolytes. Nevertheless, they’re additionally dearer, extra technologically advanced, and more durable to mass produce.
Strong-state batteries have solely been mass produced for smaller units — like wearables and pacemakers — up to now, however corporations like QuantumScape are attempting to ramp up their manufacturing for electric vehicles (EVs). Volkswagen has been co-developing these batteries with QuantumScape for greater than a decade, and the German automaker established a brand new group, PowerCo, to street check its first prototypes in 2022.
QuantumScape’s QSE-5 batteries have an vitality density of over 800 watt hours per liter (Wh/L) and might be quickly charged from 10% to 80% in lower than quarter-hour on a Degree 3 charger. Conventional lithium-ion batteries have a mean density of 300-700 Wh/L and usually require 20 minutes to an hour to be charged to 80% on a Degree 3 charger.
Subsequently, solid-state batteries might ultimately render lithium-ion batteries out of date, nevertheless it faces loads of rivals on this nascent market. Massive automakers like Toyota, Hyundai, and Nio, together with smaller start-ups like Blue Options, are all making an attempt to mass produce and commercialize their batteries earlier than QuantumScape.
When will QuantumScape commercialize its first batteries?
QuantumScape beforehand aimed to commercialize its first batteries in 2024. It began to ship its first QSE-5 samples to pick automakers within the second half of 2024, nevertheless it’s nonetheless a great distance from mass producing these batteries.
In 2025, QuantumScape plans to transition from its present Raptor separator course of to the extra superior Cobra separator course of. It expects that improve to spice up its cell reliability and manufacturing yields. It’s going to use that course of to supply the QSE-5’s extra mature B1 samples, which will probably be shipped to extra automakers all year long.
After it totally transitions to the Cobra course of and ramps up its shipments of B1 samples, the corporate plans to launch its first batteries for its first “potential buyer” in 2026. It did not identify that buyer, however there is a fairly good likelihood it is Volkswagen.
QuantumScape additionally does not plan to mass produce all of its personal batteries for the foreseeable future. As an alternative, it needs to pursue an asset-light mannequin of licensing its designs to different automakers. It is already licensing its designs to PowerCo, and CEO Siva Sivaram mentioned it was in “lively discussions with true automotive OEMs” throughout its newest convention name. That technique would presumably preserve the corporate’s prices beneath management because it develops newer batteries.
If that occurs, analysts count on QuantumScape to generate $4.28 billion in income, with a internet lack of $439 million in 2026. So with an enterprise worth of $2.2 billion, it truly appears low cost at 0.5 occasions subsequent 12 months’s gross sales.
Nevertheless it’s additionally elevated its share rely by practically 50% since its public debut in November 2020 and can seemingly preserve diluting its buyers with extra secondary choices and excessive stock-based compensation bills. Its insiders had been additionally internet sellers over the previous 12 months, and that chilly sentiment suggests its inventory will not skyrocket again towards its report highs anytime quickly.
Is it the best time to purchase QuantumScape’s inventory?
QuantumScape would possibly soar larger sooner or later however remains to be a extremely speculative inventory. I would take into account nibbling on the inventory at these ranges however would not accumulate extra shares till the corporate reveals extra progress towards commercializing its batteries.
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Leo Sun has no place in any of the shares talked about. The Motley Idiot recommends Volkswagen Ag. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
