What happened
Shares of QuantumScape (QS 2.15%) 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.
So what
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.
Now what
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.
