What happened

QuantumScape (QS -1.24%) released a fresh update on its progress toward commercializing its electric vehicle (EV) battery technology, but investors don't seem to be impressed. QuantumScape shares dropped nearly 6% Friday morning and remained lower by 3.5% as of 2:05 p.m. ET. 

So what 

Late last year, QuantumScape shipped its first 24-layer prototype battery cells to customers, including EV manufacturing partners. The company said testing at one automotive customer is now complete. While there were no surprises on results, and the battery cells mostly performed well related to charging speed and capacity retention, the company stated, "[W]e have work to do to improve reliability as we transition from prototype to commercial product." That comment seems to have given investors some pause. 

Now what

In addition to EV makers, QuantumScape is targeting the consumer electronic sector for its solid-state battery technology. While its incremental progress should not have been unexpected for investors, the report didn't offer any major steps toward commercialization of its product.

Management reiterated its plans for capital expenditures and cash operating expenses for the full year. The company believes it has enough cash to extend into late 2025, but it knows there is still much to achieve to ultimately succeed. It noted in the shareholder quarterly letter "[W]e emphasize that continuing to improve quality, consistency and throughput of our manufacturing processes and increasing reliability of finished cells is not a trivial task." 

Investors need to understand that too. The commercial product could be a major improvement for EV battery safety, charging speed, and battery life. But there is no guarantee QuantumScape will successfully commercialize the technology. Any investment remains speculative, and the latest update didn't give investors much reason to jump into the stock.