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Why QuantumScape Stock Is Down Today

By John Rosevear - Dec 14, 2020 at 10:53AM

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The reality of the company's likely timeline may be setting in.

What happened

Shares of battery start-up QuantumScape ( QS 0.11% ) were trading lower on Monday, as investors continued to digest reactions to the company's presentation of its technology on Dec. 8.

As of 10:45 a.m. EST, QuantumScape's shares were down about 10.5% from Friday's closing price.

So what

QuantumScape presented details of its battery technology to investors and researchers last week, and it was widely considered to be impressive. The company has spent a decade working on so-called "solid-state" batteries, a technology that if perfected could lower the cost of electric vehicles while making them safer and easier to recharge. 

The technology has fascinated researchers for years, but a battery that can stand up to automotive requirements -- and that can be mass-produced at a reasonable cost -- has proven to be elusive. Last Tuesday, QuantumScape CEO Jagdeep Singh said that the company appears to have technology that could solve the problem, but there's a catch: Even if all goes well, it probably won't come to market for several years. 

An electric Volkswagen ID.3 hatchback on a factory assembly line.

Auto giant Volkswagen is hoping that QuantumScape's solid-state batteries will power the next generation of its electric vehicles. But that may be several years away. Image source: Volkswagen AG.

Excitement around the potential for QuantumScape's technology drove the stock price sharply higher following Singh's presentation last week. I think what's happening now is that investors are soberly considering the likely timeline, and adjusting their valuations accordingly. 

We should note that even though the stock was down sharply on Monday morning, it was still at a price level that would have been an all-time high just a week earlier.

Now what

Now, QuantumScape has to turn its technology -- which really could be a game changer -- into a product that it can mass produce. And auto investors should take note: To justify its high valuation, it'll have to do so before rivals perfect their own solid-state batteries. 

The good news is that QuantumScape has a heavy-hitting partner and backer, German auto giant Volkswagen ( VWAGY 7.28% ), which will help it get its batteries into production. The less-good news: One of its potential rivals is a company called Toyota, which said on Friday that it plans to show an electric vehicle powered by its own solid-state batteries next year. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

QuantumScape Corporation Stock Quote
QuantumScape Corporation
$26.24 (0.11%) $0.03
Toyota Motor Corporation Stock Quote
Toyota Motor Corporation
$182.48 (-2.65%) $-4.96
Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
$31.83 (7.28%) $2.16

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