You can often find exciting and profitable investment ideas at the edge of new technologies. California-based QuantumScape (QS) is working on some breakthrough electric vehicle battery technology backed by some heavyweight industrialists, as well as Volkswagen (VWAGY), observes Carl Delfeld, editor of Cabot Global Stocks Explorer.
Current lithium-ion batteries are heavy, expensive to produce, don’t last all that long and take considerable time to recharge. QuantumScape believes they will fairly soon be rendered obsolete by solid-state batteries.
Lithium-ion batteries are made up of three layers: a positive cathode and a negative anode, each with an electrical contact, and between them is a porous polymer separator, and the whole cell is flooded by a liquid electrolyte.
In a QuantumScape solid-state battery, there is only a cathode connected to an electrical contact through a solid-state ceramic separator. No anodes needed.
In layman’s terms, this means more energy can be stored in a smaller space, giving QuantumScape’s battery greater energy density. Greater density means these batteries can achieve greater range, superior reliability and a longer life than their lithium-ion cousins.
In addition, they’re also capable of charging to 80% in as little as 15 minutes — half the time it takes the fastest Tesla Supercharger to charge.
Even better, these batteries will be much cheaper than lithium-ion ones once production scales up because of fewer and cheaper materials. The chief asset of QuantumScape is the backing of respected technologists such as co-founder and CEO Jagdeep Singh, who was educated at Berkeley and Stanford University.
Next comes QuantumScape’s chief technology officer, Dr. Timothy Holme, with degrees in physics and mechanical engineering from Stanford. Tesla co-founder J.B. Straubel and venture capitalist John Doerr are on the board as well.
Doerr is famous for backing Google (GOOGL) in 1999, turning a $12.5 million stake into $2 billion when Google went public. Bill Gates is also a prominent investor and is keenly interested in battery tech.
The next positive is the company’s partnership with Volkswagen, the largest automaker in the world and a big player in China, where its sells about 40% of its vehicles. Volkswagen has partnered with QuantumScape for close to a decade and, in 2018, the company set up a joint venture to make solid-state batteries
In 2020, Volkswagen invested $300 million in QuantumScape, securing 20% equity ownership of the company. When Volkswagen’s QuantumScape batteries go operational, Volkswagen and its brands such as Audi, Porsche and Bentley could offer cars with 450- to 500-mile range batteries. This partnership could vault Volkswagen to the front of the pack of EV players.
QuantumScape stock was hit hard in recent trading as the company surprised investors with a secondary offering that dilutes shareholders. This was an unfortunate move by management but it does not change that QuantumScape is working on some breakthrough electric vehicle battery technology. We are initially buying half of our intended position. I recommend that you purchase shares if you have not already done so.
