Why Shares of QuantumScape Spiked Today

In response to some news from a partner in its effort to commercialise solid-state battery technology for electric vehicles, QuantumScape's (NYSE: QS) shares increased as much as 6% on Monday morning (EVs).

Investors, however, might have believed that what initially appeared to be positive news could ultimately be detrimental to QuantumScape. The stock had given up some of its gains by 1:30 p.m. ET, but it was still trading 1.5% higher overall.

Volkswagen partnered with QuantumScape before it went public. Automaker is an early investor, JV partner, and board member. Barron's reports that GM has collaborated with another EV battery manufacturer.

Volkswagen and Umicore Group, a provider of materials technology in Belgium, have established a new joint venture. Lithium-iron-phosphate and lithium-nickel-cobalt-manganese are two materials produced by Umicore and utilised in conventional EV batteries.

The solid-state battery from QuantumScape utilises an anode with a higher energy density, resulting in a battery that is safer, faster to charge, and has a longer lifespan.

Investors presumably see the new Volkswagen JV as a favourable sign for QuantumScape as the automaker expands its plans to generate 3 million to 4 million EVs annually.

QuantumScape's technology is advancing, but testing and validation will take time. Commercialization is unlikely until 2025. Volkswagen and other automakers are increasing their EV lineups and can't wait for QuantumScape's commercialization.

But that doesn't mean Volkswagen's long-term objectives have changed as a result of this revelation. By 2030, the company hopes to have around 50% of its volume be electric vehicles. This would equate to 5 million to 6 million autos annually.

Volkswagen and other manufacturers will still be highly interested in collaborating with QuantumScape to provide customers a better overall product if it succeeds and starts commercial production.

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