QuantumScape (NYSE: QS) was once the prodigy for EV battery innovation. It reached a high of $131 back in 2020 but dropped to ~$7 today. Despite the setback, the company has not lost its spark and remains a major player in the solid-state battery race, a technology poised to revolutionize the electric vehicle industry. The question investors now face is: Is QS a high-risk FOMO play or a severely undervalued gem?
What is QuantumScape?
QuantumScape operates in the auto-tires-trucks sector. It spent 15 years specializing in solid-state lithium-metal battery technology, which promises faster charging, higher energy capacity, and greater safety compared to traditional lithium-ion batteries. Its first product, the QSE-5, is scheduled for commercialization in 2026.
If you want to enter the EV battery market, you’ve come to the right place. Let’s explore whether QuantumScape is the right vehicle for your income-focused portfolio.
Why It’s in the Spotlight
Quantumscape became the talk of the town for an unwanted reason after reports in May that General Motors, one of its biggest partners, is losing confidence in the EV market. GM emailed its employees about emission standards not aligning with market realities and how they pose a serious threat to GM’s business, undermining consumer choice and vehicle affordability.
Financial Health Check
It is worth noting that QuantumScape has not yet commercialized its products, so the usual financial metrics do not apply.
Startups naturally start with a net loss. It typically stems from operating expenses, which include research and development investments, as well as infrastructure development. This is also true for QuantumScape, where we can see its net loss over the past five years.
To be fair, QuantumScape’s balance sheet looks good for a startup with total liabilities of approximately $165 million against $1.32 billion in current assets. We can deduce that the company is not operating under a massive debt load and that the funds are being used for product development initiatives.
Bullish Scenario
Earlier, I mentioned that QuantumScape is has spent 15 years developing its solid-state batteries. With those years, it has built anticipation that could push the stock’s price higher if the product launch succeeds.
QSE-5, QuantumScape’s first battery, projects an energy density of around 800 watts per liter and can charge in as little as 15 minutes. This gives it at least half or twice the capacity of a regular lithium-ion EV battery and cuts the charging time by a third.
Additionally, it has secured a market with Volkswagen, which has consistently supported QuantumScape over the last decade and continues to do so today.
Risks to Consider
Like any other field, competition is cut-throat in the EV battery game. Brands such as Toyota and Nio produce their solid-state batteries. And there are other startups, such as Blue Solutions and Solid Power, which have the same goal as QuantumScape.
Second, QuantumScape finds itself in a financially challenging position. The company’s cash reserves amount to $860 million as of the first quarter of 2025. Without sales, it would have to operate on a very tight budget.
Case in point: QuantumScape cannot afford any further delays, as exemplified by the 2020 SPAC merger, when their initial goal was to commercialize the battery in 2024. Its product release in 2026 could be the final make-or-break point for QuantumScape.
Valuation and Comparison
Traditional valuation and comparison metrics do not yet apply to QuantumScape, as there are no figures to evaluate and compare.
Quantumscape is aiming to release its solid-state batteries in 2026. Its closest competitor, Solid Power, also has a 2026 release timeline. The competition is imminent; it’s a race to whoever reaches the market first.
Who should buy QS?
If you are a long-term investor with a high risk tolerance and genuinely believe in QuantumScape’s technology, QS could be the perfect addition to your portfolio. With a year to go before the company’s deadline for commercializing its batteries, investments could surge again, similar to what happened in 2020.
Final Thoughts
With cutting-edge technology and significant backing from Volkswagen, it is undoubtedly one of the stocks worth watching. In my opinion, it is a wise investment that can yield substantial profits as its commercialization nears the deadline. Still, be aware of potential changes that may impact its release.
If you’re looking for a startup with massive potential, QuantumScape is your golden ticket.
