Don't let that headline confuse you: QuantumScape (QS -12.86%) stock's wild ride this year is a story worth diving into.
Shares of the electric vehicle (EV) battery start-up kicked off 2024 on a somber note and lost 29.2% of their value in the first half of 2024, according to data provided by S&P Global Market Intelligence. A dramatic rebound in July, however, means QuantumScape stock is now up nearly 27% year to date, as of this writing.
QuantumScape's plans for 2024 are on track
QuantumScape is building solid-state batteries that are lighter, safer, more energy-dense, and can recharge quicker than the traditional lithium-ion batteries that power most EVs on the roads today.
Earlier this year, QuantumScape met one of its goals for 2024 when it shipped a new prototype battery called Alpha-2 to its automotive customers. The company called Alpha-2 a "key milestone" on its path to commercializing its first product, QSE-5, as it can incorporate feedback for the prototype from its customers before it begins producing QSE-5 cells this year.
Weeks before shipping the prototype though, QuantumScape replaced its CEO Jagdeep Singh with Dr. Siva Sivaram, with Singh continuing to serve as the chairman of the board of directors. While a C-suite change at a young, early-stage company can often spook investors, QuantumScape is betting on Sivaram's rich experience in manufacturing to steer the company to production.
So why did QuantumScape stock still fall in the first half of 2024? Fears of a slowdown in the global EV industry are largely to blame.
NASDAQ: QS
Key Data Points
With several EV makers issuing numbers and production guidance, investors started worrying about QuantumScape's future potential. Moreover, Reuters reported that Volkswagen is pursuing other solid-state battery makers. Volkswagen is a key partner and investor in QuantumScape.
Ironically, QuantumScape stock's rally this month revolves around that same key partner and investor.
Why QuantumScape stock is up 78% in July
QuantumScape stock has made a dramatic recovery in the past couple of weeks or so -- it's up a jaw-dropping 78% in July so far, as of this writing.
The thing is, QuantumScape just signed an agreement with Volkswagen's battery subsidiary, PowerCo. QuantumScape will grant PowerCo the license to mass-produce battery cells on its technology, subject to "technical progress and royalty payments."
PowerCo has been testing QuantumScape's prototype cells for several years now, so this deal is a huge vote of confidence for the battery maker, as it confirms the viability of its technology and makes Volkswagen its first official customer. QuantumScape also has enough money for now to start production and sales -- it ended the first quarter with $1 billion in liquidity and expects its cash runway to last through the latter half of 2026.
With QuantumScape all set to report its second-quarter numbers on July 24 after market close, investors can expect more information about the PowerCo deal and QuantumScape's plans ahead. That could help the intriguing EV stock maintain momentum.
