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Will VWAGY's Backing Turn QS Into a Battery Powerhouse?
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Key Takeaways
QuantumScape expanded its collaboration with VWAGY's PowerCo to accelerate the QSE-5 pilot line.
PowerCo will provide an additional $131M in milestone payments, extending QS' cash runway into 2029.
PowerCo gains rights to produce 5 GWh of QSE-5-based cells annually for VWAGY and external customers.
QuantumScape (QS - Free Report) may have the breakthrough tech, but bringing solid-state batteries to market requires more than just innovation. It requires capital, scale, and customers. That’s where its deepening partnership with Volkswagen’s (VWAGY - Free Report) battery subsidiary, PowerCo, could be the game-changer investors should watch.
Last month, QuantumScape expanded its collaboration with PowerCo to accelerate the QSE-5 pilot line in San Jose. Under the deal, PowerCo will provide up to $131 million in milestone-based payments over the next two years, in addition to the $130 million already tied to a licensing agreement. Importantly, the first milestones have already been met, and QuantumScape expects to start receiving payments this year.
The immediate benefit is financial. This capital infusion extends QuantumScape’s cash runway into 2029, giving the company more flexibility as it advances toward commercialization. For investors, that extra six months of breathing room reduces near-term funding risk — a critical consideration for pre-revenue companies in a capital-intensive industry.
The agreement allows PowerCo to engage earlier in production and automation efforts, helping QuantumScape move from lab-scale cells to higher-volume prototypes. PowerCo will also gain the right to produce up to an additional 5 GWh of QSE-5-based cells annually, not only for Volkswagen but for external customers. This widens the commercial opportunity and positions QSE-5 for broader adoption.
For QuantumScape, the licensing model is key. Instead of building massive factories itself, the company plans to license its technology to partners like PowerCo. This capital-light approach reduces risk but makes the partnership’s success vital. If PowerCo scales QSE-5 effectively, QuantumScape could carve out a significant role in the next-generation EV supply chain.
Peer Comparison: Solid Power and SES AI
Solid Power (SLDP - Free Report) leans on partnerships with BMW and Ford to commercialize its sulfide-based solid-state batteries. Instead of building full-scale factories, Solid Power supplies materials and licenses its designs. While this lowers capital risk, Solid Power depends heavily on automakers to validate and scale its technology.
SES AI (SES - Free Report) works closely with General Motors, Hyundai and Honda on lithium-metal batteries that emphasize energy density and safety. By integrating with multiple automaker programs, SES AI diversifies its risk. Still, SES AI remains in the pre-commercialization phase, with timelines for large-scale production uncertain.
The Zacks Rundown on QuantumScape
Shares of QS have increased around 74% over the past six months against the industry’s decline of 2%.
Image Source: Zacks Investment Research
QuantumScape currently has an average brokerage recommendation (ABR) of 3.44 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by nine brokerage firms.
Image Source: Zacks Investment Research
See how the Zacks Consensus Estimate for QS’ earnings has been revised over the past 90 days.
Image: Bigstock
Will VWAGY's Backing Turn QS Into a Battery Powerhouse?
Key Takeaways
QuantumScape (QS - Free Report) may have the breakthrough tech, but bringing solid-state batteries to market requires more than just innovation. It requires capital, scale, and customers. That’s where its deepening partnership with Volkswagen’s (VWAGY - Free Report) battery subsidiary, PowerCo, could be the game-changer investors should watch.
Last month, QuantumScape expanded its collaboration with PowerCo to accelerate the QSE-5 pilot line in San Jose. Under the deal, PowerCo will provide up to $131 million in milestone-based payments over the next two years, in addition to the $130 million already tied to a licensing agreement. Importantly, the first milestones have already been met, and QuantumScape expects to start receiving payments this year.
The immediate benefit is financial. This capital infusion extends QuantumScape’s cash runway into 2029, giving the company more flexibility as it advances toward commercialization. For investors, that extra six months of breathing room reduces near-term funding risk — a critical consideration for pre-revenue companies in a capital-intensive industry.
The agreement allows PowerCo to engage earlier in production and automation efforts, helping QuantumScape move from lab-scale cells to higher-volume prototypes. PowerCo will also gain the right to produce up to an additional 5 GWh of QSE-5-based cells annually, not only for Volkswagen but for external customers. This widens the commercial opportunity and positions QSE-5 for broader adoption.
For QuantumScape, the licensing model is key. Instead of building massive factories itself, the company plans to license its technology to partners like PowerCo. This capital-light approach reduces risk but makes the partnership’s success vital. If PowerCo scales QSE-5 effectively, QuantumScape could carve out a significant role in the next-generation EV supply chain.
Peer Comparison: Solid Power and SES AI
Solid Power (SLDP - Free Report) leans on partnerships with BMW and Ford to commercialize its sulfide-based solid-state batteries. Instead of building full-scale factories, Solid Power supplies materials and licenses its designs. While this lowers capital risk, Solid Power depends heavily on automakers to validate and scale its technology.
SES AI (SES - Free Report) works closely with General Motors, Hyundai and Honda on lithium-metal batteries that emphasize energy density and safety. By integrating with multiple automaker programs, SES AI diversifies its risk. Still, SES AI remains in the pre-commercialization phase, with timelines for large-scale production uncertain.
The Zacks Rundown on QuantumScape
Shares of QS have increased around 74% over the past six months against the industry’s decline of 2%.
QuantumScape currently has an average brokerage recommendation (ABR) of 3.44 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by nine brokerage firms.
See how the Zacks Consensus Estimate for QS’ earnings has been revised over the past 90 days.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.