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QS Stock – the Race for Commercialization

QS stock Quantumscape

Solid-state batteries could be the future of electric vehicles and QuantumScape Corporation (NYSE: QS) aims to emerge as a pioneer for this new battery technology. Compared to the lithium-ion batteries currently used in EVs, solid-state batteries offer more advantages which is why Volkswagen partnered with QS to develop its product. Together, they aim to include QuantumScape batteries in EVs as early as 2025. However, competitors such as Toyota appear to be winning the race for commercialization so far. After IPO’ing at $21.90 in 2020, QS stock price has fallen 66%. But its upcoming Q1 2023 earnings could improve the QS stock forecast for 2023 if the company shows progress in key areas of its batteries’ development.

QS Stock News

QS aims to become the go-to car battery manufacturer ahead of EVs’ potential penetration of the automotive industry. However, the widespread adoption of EVs is currently limited as their batteries are not competitive with internal combustion engines due to their poor performance. For this reason, EVs only form 3% of the automotive market. But, QS aims to revolutionize the industry by manufacturing solid-state lithium metal batteries which could match traditional engines in performance.

Solid-state batteries have the potential to take up a greater share of the market as they surpass lithium-ion batteries in many aspects. Compared to traditional lithium-ion batteries, solid-state lithium metal batteries can produce 50%-80% better energy density. This will lead to better car performance – potentially putting it on par with the internal combustion engines used in cars now.

QS’s battery architecture also aims to remove the graphite/silicon anode used in lithium-ion car batteries which is used to pass electric current into the battery. Instead, it replaces this anode with a lithium metal anode. Using this new anode would allow the battery to charge in under 15 minutes and cut its manufacturing cost by 20% compared to lithium-ion batteries.

Compared to other batteries, QS’ battery is also safer since it uses a non-flammable and non-combustible solid-state separator instead of the organic one used in lithium-ion batteries. Since lithium ion batteries can pose fire hazards – even leading GM to recall its Chevy Bolt EVs due to a battery issue – solid-state batteries appear to pose fewer safety risks. Overall, these advantages illustrate the market potential for QS’ product.

On this note, QS is still working to commercialize its batteries but appears to be making progress. During its Q4 2022 earnings call QS provided updates on its 2022 prototype customer testing, reporting that generally most cells have performed well on initial testing including fast charge and early-cycle capacity retention. However, QS also stated that specific customer testing protocols and results can’t be disclosed.

QS’s long-term goal is to move from prototype to product. To achieve this goal QS aims to increase cathode capacity loading to approximately 5 mAh/cm2 to match conventional lithium-ion batteries this year. It also aims to improve the efficiency of its cell packaging, deploy a new fast separator production process that’s significantly faster than its current baseline, and improve the quality and consistency of its materials and processes.

In 2023, QS aims to produce samples for use in test cars. Luckily, QS has been Volkswagen’s partner in this for many years and together they have already tested multiple generations of QS cells. These cells already have publicly validated performance at automotive power levels which helps prove its product’s potential. Most importantly, QS aims to start commercializing its product between 2024 and 2025. If achieved, QS could soon become a revenue-generating company on track to gain a greater share of the growing EV market. 

However, QS’s biggest competitor, Toyota, might win the race to commercialize the first solid-state battery before QS gets the chance. Toyota is partnering with Panasonic and boasts over 1500 patents for this technology compared to QS’s roughly 200 patents. Moreover, Toyota unveiled its functional prototype back in 2021, which puts it a year ahead of QS in that department. If QS is not able to commercialize its product before Toyota, then it may lose out on a significant share of the market. 

As is, investors can expect updates from the company when it releases its Q1 2023 earnings after hours on Wednesday, April 26th, 2023. QS is expected to report an EPS of -$0.19 and zero revenues as the company hasn’t commercialized its product yet.

QS Stock Financials

Looking into QS’s financials as of December 2022, the company has $1.4 billion in assets, including $235 million in cash and cash equivalents and $826 million in short-term investments. QS has $155 million in liabilities, $46 million of which are in current liabilities. However, the company hasn’t reported any revenues. Finally, the company’s operating expenses were $420 million and it reported $411 in net losses. According to its Q4 2022 earnings, QS successfully reduced its operating expenses extending its cash run way into the second half of 2025.

Media Sentiment

@joceyreyes209 believes QS stock is overvalued compared to ENVX – a leader in advanced silicon-anode lithium-ion battery development

Technical Analysis

QS stock forecast

QS stock has been trading in a sideways channel between the $9.44 resistance and its support at $6.77. QS stock recently tested and rebounded off of the downward trendline. Looking at the indicators, QS stock is now trading above the 21 and 50 MAs on the hourly timeframe while testing the 200 MA. The RSI is approaching overbought at 61 and the MACD is bullish.

QS stock forecast

Fundamentally, QS stock has no major catalysts coming up beside its Q1 2023 earnings call at the end of April. This earnings call could provide more information about its progress and goals for this year. For the last two earnings, QS stock has run up leading to the release date and considering that QS beat expectations for its last earnings, anticipation could be building for its Q1 2023 earnings as well.  

QS stock forecast

Considering that the current macroeconomic conditions are not favorable for growth companies with products still under development, its not surprising that QS stock has 18% short interest. This illustrates the bearish outlook some investors have for the stock given its progress to date.

QS Stock Forecast

While QS still has a long way to go until commercialization, the QS stock forecast largely depends on its ability to meet its goals and transition from prototype to product. The company was able to meet some key goals in 2022 such as delivering its 24-layer prototype battery cells to multiple OEMs for testing. Its has also continued to pique the interest of automotive manufacturers resulting in sampling agreements with a top 10 automotive OEM by global revenue and a pure-play EV OEM.

Its goals for 2023 appear show promising progress towards commercialization, however QS is not the only one racing towards the finish line. QuantumScape faces competition from not only Toyota but Solid Power (NASDAQ: SLDP) and other automotive companies interested in SSBs potential. Whether QS can become the first to market remains to be seen, but its Q1 2023 earnings call after hours on April 26th could provide more insight for investors.

If you have questions about QS stock and where it could be heading next feel free to reach out to us in our free alerts room!


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