QuantumScape (QS +0.87%), a developer of solid-state batteries, is a speculative stock. It hasn't commercialized its batteries or generated any meaningful revenue, it's racking up steep losses, yet it already has a market capitalization of $4.6 billion. However, it might still generate millionaire-making gains if it successfully scales its business over the next decade.
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QuantumScape's QSE-5 solid-state batteries have an energy density of 844 Wh/L (watt hours per liter) and can be charged from 10% to 80% in 12.2 minutes. By comparison, most lithium-ion batteries for EVs have an average energy density of 300-700 Wh/L with a fast-charging time of 20 minutes to an hour. In theory, QuantumScape's solid-state batteries could make EVs more power-efficient -- but they're also more expensive and challenging to manufacture.
NASDAQ: QS
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With the support of its top investor, Volkswagen (OTC:VWAP.Y), QuantumScape aims to break those bottlenecks with new manufacturing processes. It's shifting its production from its older Raptor separator process to its newer Cobra process to boost cell reliability, productivity, and overall yields, and it plans to license that technology to other automakers rather than mass-produce all its own batteries. That capital-light model could help the company eventually break even and generate stable profits.
Once QuantumScape finally starts commercializing its technology, it could be revalued as a hypergrowth company or attract some takeover interest. If that happens, I expect it to deliver multibagger gains -- but investors should brace for a lot of near-term volatility.
