QuantumScape's (NYSE: QS) most important partner is out with good news about the start-up's experimental new battery, and investors are excited about the update. Shares of QuantumScape traded up 18% as of 10 a.m. ET Thursday on news its battery has passed an important endurance test.
QuantumScape's battery delivers as promised
QuantumScape is one of a number of start-ups racing to address one of the biggest challenges to electric vehicle adoption: long charging time. The company's experimental solid-state battery would be a massive improvement over existing lithium-ion technologies, offering the potential for quick charges, more range, less weight, and more stability.
Volkswagen is a QuantumScape investor and hopes to be a major customer should the battery enter production. On Wednesday, a subsidiary of the German automaker said QuantumScape's solid-state cell had passed an important endurance test.
PowerCo, the VW subsidiary, said in a statement that it had confirmed that the QuantumScape battery had completed more than 1,000 charging cycles. That's about 500,000 kilometers worth of driving.
The company called the test "an important milestone," and said that even after all that wear the battery had "barely aged," still possessing about 95% of its capacity at the end of the test.
Is QuantumScape a buy heading into 2024?
QuantumScape CEO Jagdeep Singh said the results show his company's design is "capable of exceptional performance," noting that he knows of no other automotive-format battery that has shown such high discharge energy retention.
But there is still a long way to go before the battery is part of vehicles hitting the market. Battery chemistry is only half the challenge; producing these batteries at scale is a complex and uncertain endeavor. QuantumScape needs to act quickly as Toyota Motors expects to have its solid-state battery in mass production by 2028, and Chinese automaker Nio appears to be making progress as well with longer-range, faster-charging designs.
The bottom line is that QuantumScape has great potential, but remains a high-risk, high-reward stock. For investors interested in the technology and who can tolerate potential turbulence ahead, QuantumScape could be an attractive fit for a diversified portfolio. But no one should expect this stock to surge significantly higher anytime soon.
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Lou Whiteman has positions in QuantumScape. The Motley Fool has positions in and recommends Nio and Volkswagen Ag. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
