Leading automakers across the world are ramping up their electric vehicle production. Governments' and environmental bodies' focus on reducing carbon emissions, increased customer awareness, and falling EV costs are some of the key factors contributing to the increasing popularity of electric vehicles.

The decreasing cost and increasing efficiency of batteries used to power EVs could accelerate that transformation. This is where QuantumScape (QS -0.98%) could play a crucial role. Let's see why the company's work in advancing the battery technology is promising, and where it may stand five years down the line.

A solid future

One of the major factors restricting faster growth of EVs is the limitations of current batteries. The lithium-ion batteries currently in use face certain constraints. The two major disadvantages to combustion vehicles is the range on a single charge and the time to recharge. That's a big drawback compared to gasoline-powered vehicles, which can be refueled in minutes. Moreover, the battery costs are still high for mass adoption, even after falling significantly over the last few years.

A young woman charges her electric car while her dog watches patiently.

Image source: Getty Images.

QuantumScape claims to have developed a proprietary material that can be used to make solid-state batteries that will allow the current carbon or silicon anodes to be replaced with lithium-metal anodes. Its solid-state batteries are more energy-dense, and so can provide a much longer range without the need to recharge. They also can be recharged faster compared to the current batteries, and, in theory, can be produced at a lower cost.

While this sounds promising, it's important to note that a lot of research work remains to be done before the technology can be commercialized. QuantumScape's batteries have only been tested in labs so far. The company hasn't also yet produced the multi-layer stacks needed in automobiles. There are several other technical factors that the company needs to work on as well before its product is ready for use.

When will QuantumScape start production?

Despite uncertainties, if things go according to QuantumScape's plans, the company could start pilot production of its batteries in 2024. Five years from now, the company expects to have a production capacity of 6 GWh (gigawatt hours), which would be enough to support around 60,000 vehicles. It still might not achieve positive EBITDA by then, however -- it expects that could take one more year from there.

In its latest quarterly letter, QuantumScape shared encouraging results relating to its four-layer cells. The company is still working on increasing the layers to meet the requirements of automobiles. It also reiterated its expectations of starting commercial production in the 2024-2025 timeframe.

On the flip side, QuantumScape could fail to achieve the required breakthrough in solid-state battery technology. Things should become clearer in nearly three years, when it expects to start pilot production. In either case, much of the current uncertainty surrounding the company's prospects should be gone five years from now.

The battery stock is promising, but risky

QuantumScape might have all it needs to succeed. Top names from the auto industry are supporting the company. It also has Volkswagen (VWAGY -0.17%) as an investor, and a ready buyer of its products when they are made.

At the same time, it has a formidable task at hand. Solid-state battery technology has been researched for years, but no company has been able to successfully commercialize it so far. No one can say for sure whether QuantumScape will be able to accomplish this feat. Moreover, one of the several other companies researching the technology may bring it to market before QuantumScape can.

For the above reasons, though QuantumScape's stock is promising, it is risky too. Investors need to keep that in consideration while making an investment decision.