QuantumScape's Losses Deepen As Solid-State EV Battery Development Ramps Up

QuantumScape (QS) reported second-quarter losses that were deeper than expected late Tuesday as the Volkswagen (VWAGY)-backed startup ramps up development of solid-state EV batteries. QS stock rose.


QuantumScape Earnings Report

Estimates: Analysts expect a loss of 7 cents a share on zero revenue growth, according to FactSet, narrowing from a Q1 loss of 9 cents a share and a Q4 loss of $1.26 a share.

As a development-stage company, QuantumScape may not have any sales worth speaking of for years.

Results: Losses widened to 12 cents a share from 6 cents a share a year ago with no revenue, as research and development expenses nearly tripled to $36.8 million. QuantumScape is testing its first 10-layer cells, after obtaining four-layer results in February and single-layer results in December.

The company plans to demonstrate several dozen layers in 2022 and produce test cells for vehicles on QS-0 pre-pilot production line in 2023. Cash spending on operations remains at $130 million-$160 million for 2021, but capex is tracking

higher due to the pull forward of the timing of QS-0 pre-pilot manufacturing line outlays from 2022 into 2021.

In March, Volkswagen increased its investment in QuantumScape by an additional $100 million. On May 14, QuantumScape announced a joint venture with Volkswagen tied to a pilot-line facility in Germany, called QS-1. QuantumScape is also ramping up a planned pre-pilot line in its San Jose headquarters, called QS-0. It plans to move into QS-0 in Q4 while targeting commercial production in the 2024-2025 time frame

Outlook: Management still plans to deliver prototype samples in commercially

relevant form factors to automaker partnerss in 2022, provide cells for R&D test

cars from QS-0 in 2023, and enter commercial production in 2024-2025.

In May, QuantumScape guided for full-year 2021 spending on operations and capex of $260 million-$320 million, up at the midpoint from its prior outlook for $230 million-$290 million.

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QS Stock

Shares rose 0.8% late after closing down 5.2% at 21.41 in Tuesday’s stock market trading, still mired below a falling 50-day line. QS stock soared after debuting via a merger with a special purpose acquisition company, or SPAC, in November. But shares are more than 80% below their December 2020 peak. Concerns linger about its timeline to commercialization and ability to scale.

EV battery maker Romeo Power (RMO) fell 4.2%. Decarbonization Plus Acquisition Corp III (DCRC), a SPAC that is combining with QS rival Solid Power, lost 0.15% Tuesday. Shares of the combined company are set to debut in Q4 and will trade under the symbol SLDP.

In May, Ford (F) hiked its investment in Solid Power, after initially investing in the company in 2019. BMW (BMWYY) also has invested in Solid Power.

QuantumScape is developing next-generation, solid-state lithium-metal batteries for electric vehicles. Compared to current lithium-ion batteries, this next-gen technology offers higher energy density, enables fast charging, reduces costs and increases battery life, it adds.

In May, QuantumScape reported successfully making full-sized four-layer cells. It said it’s on track to meet its 8-10 layer cell milestone by year end, and to make “commercially relevant prototype samples” by 2022.

QuantumScape “has achieved promising results with its patented ceramic separator,” Morgan Stanley analysts say.

But out of five analysts on Wall Street, only one rates QS stock a buy while four have a hold, according to TipRanks.com.

Find Aparna Narayanan on Twitter at @IBD_Aparna.


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