QuantumScape Corp (NYSE: QS) signed an agreement with PowerCo – the battery unit of Volkswagen Group on Thursday.
The deal will enable QS technology to power more of VW vehicles.
QuantumScape stock opened about 35% up on Thursday following the Volkswagen news.
Why does it matter for QunatumScape stock?
The agreement will license PowerCo to mass produce EV battery cells based on the solid state battery technology of QuantumScape “upon satisfactory technical progress and certain royalty payments”.
Initially, the battery unit of Volkswagen will manufacture a maximum of 40 gigawatt-hours (GWh) based on QS technology per year.
It will, however, have the option to later expand to 80 gigawatt-hours per year – sufficient to power about 1 million vehicles annually. QuantumScape stock is down well over 20% versus its YTD high at writing.
Why are solid-state batteries sought after?
The non-exclusive agreement that QuantumScape inked with Volkswagen on Thursday replaces a year-long joint venture between the two companies to co-manufacture batteries. According to the press release today:
It [the agreement] will feature a combined workforce initiative to accelerate the industrialisation of QuantumScape’s technology. A large, dedicated scale-up team will execute on the industrialisation activities.
Solid-state batteries are sought after power sources as they are believed to enable close to endless range on electric vehicles.
Other potential benefits include faster charging and capacity to optimally perform at a wide range of severe temperatures. QuantumScape stock, however, may not be attractive for income investors as it does not currently pay a dividend.
Are QS shares worth buying today?
All in all, VW and QS are committed to building a product that “will be scaled-up for integration in a Volkswagen Group vehicle series”.
The news arrives months after QuantumScape reported $121 million of net loss for its first financial quarter versus a much narrower $96 million loss expected.
The New York listed firm ended the quarter with just over $1.0 billion in liquidity. The cash runway, it added, extended into the back half of 2026. According to Frank Blome – the chief executive of PowerCo:
QuantumScape’s technology is poised to enter a pivotal stage where PowerCo’s specialised expertise, resources and global factories can help facilitate the transition to industrial-scale production.
Wall Street currently has a consensus “hold” rating on QuantumScape stock. They find it fairly valued at a bit over $6.0 – a price that QS has already well surpassed on Thursday.
QuantumScape is scheduled to report its Q2 earnings in the final week of July. Consensus is for it to lose 22 cents per share versus 26 cents per share a year ago.
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