Shares of QuantumScape (QS -0.92%) are falling 7.2% at 10:42 a.m. ET Thursday after the solid-state battery maker reported second-quarter earnings yesterday that widely missed analyst expectations.
The pre-revenue company -- a nice way of saying QuantumScape hasn't made any sales of its electric vehicle batteries -- is counting on its revolutionary technology to disrupt a $300 billion industry.
QuantumScape promises to allow safer fast charging of lithium-ion batteries without the risk of fires associated with traditional electric vehicle batteries. Yet as the EV market itself has cooled down in recent quarters, so has the battery-maker's stock.
Shares of QuantumScape are down 53% in 2022 and have lost more than three-quarters of their value over the past year. Despite purported demand for EVs, a deteriorating economy and rising interest rates will make higher-cost electric vehicles a tougher sell, even when gasoline prices remain elevated north of $4 per gallon.
With the average cost of an EV at $66,000, that puts them out of the range of many car buyers and will lock them into the fossil fuel-powered vehicles for the immediate future, if not longer.
The problem for QuantumScape is it needs to prove it can scale up its technology to meet what ought to be a burgeoning need in the industry for its product. It seems to have the science behind it showing its batteries are better than current lithium-ion batteries, but moving from theory to practice may be difficult in this environment.
Short sellers, though, have weighed in on QuantumScape's stock, which has 23% of its shares outstanding sold short and they're expecting it to fall further before any U-turn is recorded.