Time to Buy the Dip on QuantumScape Stock?
Key Points
QuantumScape develops next-generation solid-state lithium-metal batteries that offer higher energy density, faster charging times, and greater safety than traditional lithium-ion batteries.
The company has its roots in the electric vehicle market but is exploring growth in other high-value sectors, including data centers and defense.
It has demonstrated its solid-state architecture in the lab and is now moving to automated assembly to enable large-scale production.
QuantumScape's (NASDAQ: QS) battery technology aims to overcome the limitations of today's lithium-ion technology. Since its founding, the company has focused on electric vehicles (EVs), but growing demand for power solutions from hyperscaler data centers and defense technologies could open up another avenue for growth.
That said, QuantumScape stock has had a rough go of it since its 2020 initial public offering (IPO). With QuantumScape stock down 95% from its all-time high, is it finally time to buy the dip? Let's dive into the company and what's next for it.
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How QuantumScape is enhancing battery technology
QuantumScape designs next-generation solid-state lithium-metal batteries. Its battery technology aims to overcome the structural limitations of traditional lithium-ion batteries by providing significantly higher energy density, faster charging (from 10% to 80% in under 15 minutes), and enhanced safety.
Since 2012, Volkswagen has been a major partner and investor in QuantumScape, supporting its research and development. In 2024, Volkswagen's battery subsidiary, PowerCo, signed a $130 million licensing agreement to produce up to 80 gigawatt-hours of batteries annually using QuantumScape's technology. It has since expanded the agreement by another $131 million.
Image source: Getty Images.
While EVs remain a primary focus, QuantumScape is also exploring high-value markets like data centers, robotics, aviation, and defense. This could help QuantumScape expand beyond the EV industry, which has experienced uneven adoption over the past few years. By commercializing in other industries, QuantumScape diversifies into other high-value alternatives that could provide a faster path to commercialization and profitability.
Moving toward large-scale production
QuantumScape has made strides in recent years, moving from pure research and development toward mass production. Last year, it introduced its Cobra separator process, a specialized, next-generation heat-treatment system that bakes and manufactures ceramic sheets 25 times faster than before. Meanwhile, its Eagle Line automated pilot production line uses the Cobra separator machine and automated cell-assembly robotics to quickly build prototype cells for delivery to clients.
Earlier this year, the company added defense executive Dr. Ross Niebergall, formerly of L3Harris Technologies and RTX's Raytheon, to its board of directors, signaling a potential push to secure government and military drone contracts. Management noted that QuantumScape is "ramping up engagements in new markets" and preparing sample shipments of its QSE-5 cells for testing in artificial intelligence data centers.
Is QuantumScape a buy?
Investors buying today could be getting in on the ground floor of QuantumScape's battery technology. If you believe the company can secure major defense deals and data center deals and expand its platform beyond EVs, then QuantumScape may be a stock for you.
However, it's still a long road to mass production. Analysts covering the company project revenue of $29.5 million in 2027 and around $360 million in 2028, showing the company is still a couple of years away from generating meaningful revenue. For these reasons, I think investors are better off waiting for the company to advance its technology and secure more deals before buying the stock.
Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends L3Harris Technologies and RTX. The Motley Fool has a disclosure policy.