Electric vehicle (EV) solid-state battery company QuantumScape (QS 0.78%) doesn't have a product yet and is still probably multiple years away from potential commercialization. But the technology it's working on has so much potential that its progress is being watched closely. That makes the stock highly volatile, as it proved to the upside last month. For the full month of March, QuantumScape shares spiked 23.9%, according to data from S&P Global Market Intelligence.
QuantumScape has some well-known investors, including both Volkswagen and Bill Gates through his clean-energy fund Breakthrough Energy. Investors knew the German automaker could provide a market in waiting for when QuantumScape's batteries are available commercially. But investors may have been a bit surprised last month, when Barron's cited a German news outlet reporting that a new fully electric Porsche 911 sports car could be powered by QuantumScape's solid-state batteries.
That development really shouldn't come as too much of a surprise to followers of QuantumScape. Porsche is part of the group of Volkswagen brands, and Volkswagen initially invested in QuantumScape before it traded publicly. That partnership began in 2012, leading the automaker to become the largest shareholder in QuantumScape. Some key milestones for the solid-state battery technology are also based on Volkswagen's testing process.
QuantumScape has successfully built multilayer battery cells and in 2021 delivered cells to Volkswagen that successfully completed one milestone that unlocked a previously agreed upon $100 million investment from the auto giant.
Volkswagen isn't the only auto manufacturer working with QuantumScape. Last month, the battery maker said it signed an agreement with what will be its fourth manufacturer. While it didn't name the company, it did reveal that it was one of the top 10 global automakers by revenue.
As with Volkswagen, the new agreement includes certain milestones during development that could lead to not only a supplier-customer agreement, but also potentially a joint venture to build and operate a solid-state battery plant in the U.S. for the automaker's production vehicles.
As QuantumScape moves closer to successful commercialization, more interest will come from investors. It remains a speculative stock, however, with a market capitalization of nearly $9 billion. But for those who want to include a high potential risk/reward investment in a portion of a portfolio, QuantumScape's technology could have a large market if it succeeds. When news of potential progress comes as it did in March, it's not surprising to see the stock move up sharply.