QS Stock: 3 Investing Takeaways From the QuantumScape Solid-State Battery Showcase

© Source: Tada Images / Shutterstock.com The headquarters of QuantumScape (KCAC) in San Jose, California.

Just weeks after debuting on the New York Stock Exchange, QuantumScape (NYSE:QS) is looking to disrupt the world of batteries and all things electric. After releasing impressive figures on its solid-state battery technology, the company hosted a Solid-State Battery Showcase. So what do investors need to know about the event? And how is this a catalyst for QS stock?

© Provided by InvestorPlace The headquarters of QuantumScape (KCAC) in San Jose, California.

Investors should start by really understanding the story here. QuantumScape just recently came public via Kensington Capital. At the time of the SPAC deal, there was great excitement surrounding QS stock. This is because solid-state batteries offer a way to improve on current electric vehicles. Additionally, QuantumScape comes with some pretty serious backing. It has a multi-year strategic relationship with Volkswagen (OTCMKTS:VWAGY) and the support of Bill Gates. That is not too shabby for a battery startup.

Leading up today then, there was a lot of attention on QS stock. Could QuantumScape deliver?

It appears that, as of this morning, the company did just that. In an early morning release, QuantumScape shared that its solid-state batteries can reach an 80% charge in just 15 minutes. Following that up, CEO Jagdeep Singh elaborated on just what this means for QS stock and for the industry.

If you missed the QuantumScape Solid-State Battery Showcase, here are the three key investing takeaways you need to know.

Takeaway No. 1: QS Stock Rides High on Real Science

A big theme during the QuantumScape Solid-State Battery Showcase is that this is the real deal, not just another overhyped press release. As industry experts chimed in, the consensus is that QuantumScape has really made a huge advancement.

So what exactly do you need to know?

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As of today, electric vehicles rely on traditional lithium-ion batteries to get around. These batteries present limitations in terms of safety, cost, driving range and overall power. And although many companies are continuing to innovate their battery systems, a true solid-state solution has not emerged. QuantumScape has been working to change that.

Essentially, current lithium-ion batteries use liquid electrolytes within the cells, and these electrolytes allow the battery current to pass through. Then, two assumptions come into play. The first is that lithium is the best metal to use for electric vehicle batteries. The second is that lithium is unstable with liquid electrolytes. As Singh explained, current batteries run the risk of short-circuiting and catching fire. Consumers and automakers alike no doubt consider this a challenge to electrification.

This is where solid-state batteries come in. Instead of liquid electrolytes, they use a solid-state separator that allows the battery current to pass through. QuantumScape has introduced a ceramic separator that is thinner than human hair. This innovation could rapidly disrupt the battery sector.

Now, QuantumScape believes its batteries can charge rapidly, withstand rates of power for fast charging, operate at a full range of temperatures and ultimately lower costs.

Takeaway No. 2: QuantumScape Will Boost EV Adoption

QuantumScape has a simple telling of the current electric vehicle narrative.

Right now, electric vehicles are not appealing enough to convert all consumers. New solid-state battery technology from QuantumScape will power a new generation of EVs. This will boost consumer adoption, and it will send QS stock to new heights.

Investors likely know that electric vehicles are increasing in popularity. Industry leader Tesla (NASDAQ:TSLA) continues to rally, and is now the most valuable automaker by market capitalization. New EV companies continue to enter the public markets. Legacy automakers like Ford (NYSE:F) and General Motors (NYSE:GM) continue to electrify their operations. Consumer adoption is increasing, spurred on by more options and increased interest in protecting the environment. However, some consumers are just not ready to make the switch to all-electric cars.

According to QuantumScape, that is largely because of their current limitations. A huge focus right now is on driving range — how far can a car go before it needs to get charged? Charging a battery to full capacity is not the same as a quick stop at the gas station. Some estimates show it takes 40 minutes for the average lithium-ion battery to reach 80% capacity. Plus, while Tesla has made huge inroads in building out a national charging infrastructure, there is still work to be done.

Now, with a 15-minute charge time, a safer driver experience and lower battery costs, Singh and the team at QuantumScape think the next chapter of the EV evolution is underway.

Takeaway No. 3: All-Electric Everything

Why stop with electrifying cars and trucks?

Right now, much of the focus is on passenger and commercial vehicles. We are watching Arrival electrify vans and buses. Nikola (NASDAQ:NKLA) wants to electrify freight trucks. Lordstown Motors (NASDAQ:RIDE) promises to electrify commercial pickup trucks. Arcimoto (NYSE:FUV) promises to electrify three-wheel delivery and rapid response vehicles. These vehicles appeal to different people and serve very different perhaps. However, they all focus on the ground.

Now, QuantumScape thinks it can unlock electric aviation with solid-state batteries. Although the company did not go too in depth on this during the showcase, it is something for investors to watch. And it makes a lot of sense. Lighter-weight, higher-power and longer-range batteries are necessary to electrify aircraft.

As you consider the future for QS stock, think about what other forms of transportation will get a makeover in this decade and next. At least to QuantumScape, that is the potential of solid-state batteries.

The Bottom Line on QS Stock

What should you be watching after today? Well, look to see what partners and large customers are joining the conversation. Volkswagen reiterated its support for QuantumScape today, and says it continues to test the solid-state battery tech. Singh also said that this technology is ready for deployment once production scales up. A large part of the story will come from how long it takes for solid-state batteries to appear in vehicles en masse.

Beyond that, look to see what other leaders in the world of EVs are doing. Keep an eye on Tesla. Keep an eye on battery-swapping technology that is popular in China. And lastly, make sure you keep QS stock on your watch list. The story here is very intriguing.

On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Sarah Smith is a Web Content Producer with InvestorPlace.com. 

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