What happened
Shares of QuantumScape (QS 3.71%) jumped as much as 6% Monday morning on some news from a partner in its quest to commercialize solid-state battery technology for electric vehicles (EVs). Investors, however, may have thought what seemed like good news could ultimately be a negative for QuantumScape. As of 1:30 p.m. ET, the stock had lost some of its gains and was trading 1.5% higher for the day.
So what
Volkswagen has been a partner with QuantumScape prior to the battery technology company trading publicly. The global automaker is an early investor, a joint venture (JV) partner, and has board representation. The auto giant has now partnered with another company in the EV battery sector, too, Barron's reported today.
Volkswagen has announced a new joint venture with Belgian materials technology company Umicore Group. Umicore makes compounds used in traditional EV batteries, including lithium-iron-phosphate and lithium-nickel-cobalt-manganese. QuantumScape's solid-state battery uses an anode that provides higher energy density -- resulting in a safer, fast-charging, longer life battery -- that requires a solid-state separator.
Investors likely first considered the new Volkswagen JV a positive sign for QuantumScape as the automaker works to expand its plans to build enough battery capacity to make 3 million to 4 million EVs annually (the company will also use third-party battery suppliers). But a subsequent thought may be that Volkswagen is preparing to make traditional batteries based on the new plans.
QuantumScape has been progressing with its technology, but testing and validation will still take time, and it's likely commercialization won't come until 2025. Volkswagen, and many other automakers, are already expanding their EV lineups and can't wait for QuantumScape's technology to be at commercial scale.
But that doesn't mean this announcement has changed Volkswagen's long-term plans. The company wants to have about 50% of its volume in EVs by 2030. That would represent between 5 million and 6 million vehicles per year. If QuantumScape does succeed and begin commercial production, Volkswagen and other manufacturers will still be very interested in partnering with it to provide customers a better overall product.
