Why Shares of QuantumScape Are Plummeting Today

What happened

Poised to extend their decline for a third consecutive day, shares of QuantumScape (QS 5.69%) are plunging in today's trading session. Investors are motivated to click the sell button today after learning of growing competition in solid-state batteries, while the bitter taste of an analyst's recent bearish take on QuantumScape's stock is also contributing to the sell-off.

As of 12:14 p.m. ET, shares of QuantumScape have fallen 7.5%.

So what

Taking a step toward its goal of including solid-state batteries in its electric vehicles (EVs) by 2028, Nissan is retooling its plant in Yokohama to commence production of solid-state batteries next year, according to Automotive News.

Nissan isn't the only major manufacturer to report progress with solid-state batteries. Last month, Toyota reported that it achieved a "technological breakthrough" with its solid-state batteries program, suggesting that it may be ready for commercial production of the innovative batteries in 2027 or 2028.

TD Cowen's decision to revise its price target downward on QuantumScape's stock represents a second factor leading to the drop today. Downgrading the stock to market perform from outperform on Wednesday, TD Cowen also slashed the price target to $8 from $14. Based on the stock's closing price of $10.19 on Wednesday, the new price target implies downside of more than 21%.

Now what

With Nissan and Toyota accelerating toward commercial production of their solid-state batteries, it's no wonder that QuantumScape investors feel disheartened today, as the company is less clear about when it anticipates achieving commercial production of its own batteries. TD Cowen's inauspicious view of where the stock is headed, moreover, seems to be amplifying that doubt.

Regardless of today's disappointing news, those who want to power their portfolios with QuantumScape will want to check in with the company when it reports its second-quarter 2023 financial results next week to see if management provides more insight into the company's near-term prospects.