QuantumScape (NYSE: QS) is working to revolutionize electric-vehicle (EV) battery technology. If its solid-state solution could be proven successful and capable of be produced at scale, it may lead to a surge of interest in consumer EV demand.
One Wall Street firm is acknowledging the corporate’s progress and has raised its view of the stock. That led QuantumScape shares to surge today by as much as nearly 6%. As of 11:45 a.m. ET, the stock was still trading higher by 3.9%.
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Based on reports, financial services firm HSBC has upgraded QuantumScape from the equivalent of a sell to a hold advice. It also raised its price goal on the stock by nearly 13% to $5.30. QuantumScape shares closed Monday’s trading at $4.73 per share.
The corporate has made meaningful progress with its battery technology this yr. It also announced an agreement with PowerCo earlier this yr, the battery division of world automaker Volkswagen.
That agreement will help to industrialize QuantumScape’s technology, giving PowerCo a non-exclusive license to fabricate batteries using the technology to construct as many as 1 million EVs per yr. It was also a big reason for HSBC’s upgrade. The agreement may lead to other deals at production levels beyond QuantumScape’s internal capabilities.
Investors still must view QuantumScape as a high-risk investment. If successful, the batteries are intended to offer charging capability in under quarter-hour while allowing for higher range and lower overheating risks.
Nevertheless, the corporate only recently shipped its first prototypes for automotive testing. The collaboration with PowerCo will lower QuantumScape’s capital needs and thus extend its money runway into 2028. But it should likely take that much time for its technology to be fully evaluated and validated by potential customers.
An investment here could repay down the road. Nevertheless, it should likely take several years before the business itself could be sustainable.
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