white and orange gasoline nozzle

QuantumScape stock (NYSE:QS) has risen this week to $26.50 per share. It announced on Tuesday that it had partnered with an unnamed large automaker to evaluate prototypes of its solid-state battery cells, sending the Volkswagen backed firm’s shares 25% higher.

What is QuantumScape

QS is an American company that does research about solid state lithium metal batteries for electric cars. The company is headquartered in San Jose, California and employs around 400 people. Investors include Bill Gates and Volkswagen mentioned above. What is the benefit of the QS batteries? A quote from their website says “the higher energy density of QuantumScape solid-state lithium-metal cells, at our target of 1,000 Wh/L, would translate to more range in electric vehicles, potentially a 50-80% improvement vs today’s leading electric vehicles, depending on the vehicle design.  Thus, for example, a vehicle that gets 200 miles of range could get between 300 and 400 miles of range.

EVs are one of the top emerging sectors, and the likes of Tesla have seen impressive growth in recent years. One reason they are so popular is the range of an electric motor. The demand to continue expanding the limits that EVs can travel will only rise. QuantumScape looks set to benefit from this.

The stock

The QuantumScape stock price made a tremendous run at the end of 2020, running from $14 to $132 in just over one month. The company went public through a SPAC (special purpose acquisition company) during the hype surrounding these acquisitions. But where is the stock heading now? This latest news will change the sentiment for the stock. There is resistance at $32 for the stock and it hasn’t closed above that level since May after a few attempts. This is the first price target to achieve. Above this, there is little resistance until $40. I can see this price being achieved by the end of this year.

I like this as a long term option also. Investing directly in an EV company can come with its risks, especially with start-ups. Many companies struggle with production in the early stages. Even Tesla have had their share of issues in the past. Fisker is another EV company that has done well but sees volatility on a shorter term basis. QS provides an opportunity to being invested in the industry without these risks.

It’s a buy

The price should hold above $20 moving forward. I can see $65-$70 being achieved in the next few years. This gain would be a nice way to help your portfolio.

Leave a Reply