What happened
QuantumScape (QS -1.65%) stock rocketed higher by as much as 12.8% Monday afternoon before moderating to close the session up by 6.8%. The sudden jump in the stock price can be attributed to an article published by German business monthly Manager Magazin that fueled speculation about a potential partnership between QuantumScape and a luxury car maker.
So what
QuantumScape is building multilayer solid-state lithium metal battery cells that are reportedly better than the lithium-ion batteries that currently power most electric vehicles (EVs) on several counts, including energy density, efficiency, charging speed, cost, and safety.
Image source: Getty Images.
According to the Manager Magazin article, Volkswagen's (VWAGY -0.33%) luxury brand Porsche, best known for its 911 sports car, is reportedly developing an electric version of the 911 that could use solid-state batteries, and is working with QuantumScape to supply them.
Although neither QuantumScape nor Porsche have confirmed anything yet, investors were perhaps betting on this rumor proving true, given the company's long-standing partnership with Volkswagen.
In 2021, QuantumScape received an additional $100 million worth of funding from Volkswagen after its battery cells met the automaker's technical milestone requirements in lab tests. The two companies have also signed an agreement to jointly develop a solid-state battery pilot-line facility.
Now what
QuantumScape doesn't expect to start commercial production of its batteries before 2024. Yet investors have bet big on the stock, and the backing of Volkswagen forms a key part of the investment thesis for the EV battery start-up.
Monday's speculation about a sports car potentially running on solid-state batteries has only fueled investor hopes that QuantumScape could eventually pull off what no company has yet, and prove the viability of solid-state batteries in the rapidly growing EV industry.
