QuantumScape (NYSE:QS) is working to revolutionize battery technology for electric vehicles (EV). If the solid-state solution can prove successful and be produced at scale, it could lead to a surge in consumer demand for electric vehicles.
One Wall Street firm recognizes the company’s progress and has raised its view on the stock. That sent QuantumScape shares up a whopping nearly 6% today. At 11:45 a.m. ET, the stock was still trading 3.9% higher.
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According to reports, financial services company HSBC has upgraded QuantumScape from the equivalent of a sell to a hold recommendation. It also raised its price target for the stock by almost 13% to $5.30. QuantumScape shares closed trading Monday at $4.73 per share.
The company has made significant progress with its battery technology this year. It also announced an agreement with PowerCo, the global automaker’s battery division, earlier this year Volkswagen.
That deal will help industrialize QuantumScape’s technology, giving PowerCo a non-exclusive license to produce batteries using the technology to build as many as 1 million electric vehicles per year. It was also a major reason for HSBC’s upgrade. The agreement could lead to other deals at production levels beyond QuantumScape’s internal capabilities.
Investors should still consider QuantumScape a high-risk investment. If successful, the batteries are intended to be able to charge in less than 15 minutes, while allowing greater range and less risk of overheating.
However, the company recently sent its first prototypes for automotive testing. The partnership with PowerCo will reduce QuantumScape’s capital needs, thereby extending its cash runway to 2028. But it will likely take that much time for the technology to be fully evaluated and validated by potential customers.
An investment here could pay off in the long term. However, it will likely take several years before the business itself can be sustainable.
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