Shares of Quantumscape (QS 0.94%) had a down day Thursday even as the broader market rallied.
While there was no company-specific news about the solid-state battery maker, traders apparently reacted to disappointing earnings reports from Rivian (RIVN 2.29%) and Lucid (LCID 0.20%). Quantumscape shares closed Thursday down by 3.6% after having been off by as much as 5% earlier in the session. Meanwhile, shares of both of those unprofitable EV start-ups fell by double-digit percentages.
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The EV market downshifts
The entire electric vehicle industry is high risk, but few stocks in the sector carry more risk than Quantumscape, a development-stage solid-state battery maker. Solid-state battery technology offers higher energy density, better range, faster charging times, and more reliability than commonly used lithium-ion batteries, but the technology is still unproven at scale. Meanwhile, Quantumscape is losing money as it develops its technology, but is counting on demand from investors and EV buyers to fund its research and keep its stock price up. The outlook for that demand took a step backward Thursday after Rivian and Lucid both offered underwhelming updates.
Rivian said that after it more than doubled vehicle production to just over 57,000 in 2023, it expects no production growth at all for 2024, forecasting that it will manufacture just 57,000 vehicles. That surprised investors and analysts who had expected its strong ramp-up to continue. Rivian cited challenges including high interest rates and other macro issues that have led to a slowdown in the growth of EV sales and cutbacks in production at a number of EV makers.
Lucid, meanwhile, missed revenue estimates for the fourth quarter, and its path to profitability seems to be narrowing as sales growth slows and losses mount.
NASDAQ: QS
Key Data Points
Is there hope for Quantumscape?
The electric vehicle industry isn't dead by any means, but it is undergoing a correction. Valuations for companies in the industry are still sky-high, and the correction is likely to persist until automakers like Rivian and Lucid demonstrate a path to profitability.
As for Quantumscape, the company has no revenue, so the trades mostly on hype for EVs and its solid-state battery technology. It lost $113 million in the fourth quarter.
It did score a noteworthy win recently as Volkswagen reported positive results from its testing of Quantumscape's A0 prototype battery cells, but the company still appears to be years away from significant revenue. If excitement around EVs continues to fade, expect Quantumscape stock to fall further.
