QuantumScape Announced More Business. The Stock’s Reaction Highlights a Shift.

QuantumScape Announced More Business. The Stock’s Reaction Highlights a Shift.

Text size

QuantumScape’s battery technology could be a game changer, but significant sales aren’t expected for years.
Sam74100/Dreamstime

The electric-vehicle battery-technology company QuantumScape announced a new business partner—an unidentified luxury auto maker—but the stock isn’t doing much despite the positive news. It highlights a recent negative shift in sentiment about EV-related stocks.

The company says the auto maker is an “established global luxury” auto maker. The two companies will undergo testing and validation of QuantumScape ‘s new solid-state battery technology. It declined to elaborate beyond what was in the Friday filing.

Despite the lack of detail, it’s good news. Yet shares of QuantumScape (ticker: QS) opened down on Friday, though they had rebounded for a gain of 0.5% by midday. The S&P 500 and Dow Jones Industrial Average were down 0.5% and 0.9%, respectively.

The lack of a bigger move signals a broader problem EV-related stocks are having. Back in September, a similar announcement led to QuantumScape stock bouncing almost 15% in one day.

Investor enthusiasm for EV stocks has waned in December. QuantumScape stock has dropped about 37% over the past month. Tesla (TSLA) shares are down 15%. Shares of Rivian Automotive (RIVN), the newly public electric trucking company, have dropped 35%. Stock in Chinese EV maker NIO (NIO) is down about 21%.

The reason are numerous. Tesla CEO Elon Musk is selling shares after exercising vested management stock options. The large volume of sales and their slow pace is dragging on the stock, and because Tesla is the EV leader, what happens to it affect the entire sector.

Delisting concerns are plaguing U.S.-listed Chinese stocks. NIO falls into that category. And when large EV peers become less valuable, it drags down comparable valuations.

Investors are also worried about rising interest rates. Higher rates hurt richly valued stocks more than others. Almost all EV stocks fall into the richly valued camp.

Rivian investors, meanwhile, are worried about the pace of its production ramp up.

Nothing notable bad has happened to QuantumScape specifically. The company is working on commercializing solid-state battery technology that promises lower costs, faster charging, longer battery life and better safety.

Solid state, for QuantumScape, means having a solid electric-charge facilitator instead of a liquid one, which is standard in today’s batteries.

The technology is a game changer, but it is new. Commercial grade products—and significant sales—aren’t expected until mid-decade at the earliest. Between now and mid-then, new partnerships and testing reports are what investors expect from QuantumScape.

Write to Al Root at allen.root@dowjones.com

Post a Comment