On Thursday, Truist Securities maintained a Hold rating on shares of QuantumScape Corporation (NYSE:QS) shares with a steady price target of $6.00.
The decision follows QuantumScape's announcement of a new collaboration agreement with Volkswagen (ETR:VOWG_p) Group's battery subsidiary PowerCo. The revised deal includes a non-exclusive royalty-bearing licensing agreement that will be active once certain technical milestones are achieved.
The partnership adjustment is seen as a positive development for QuantumScape, as it aims to enhance capital efficiency and expedite the commercialization of its QSE-5 battery technology. In addition to the restructured agreement, QuantumScape will receive a $130 million royalty pre-payment from PowerCo upon meeting the set technical milestones.
The initial agreement between the two companies allows for a commercial scale-up to 40 gigawatt-hours per year for PowerCo, with the potential to double that capacity to 80 gigawatt-hours per year. The progression towards these goals will be monitored by a joint scale-up team formed under the new arrangement. Further details are expected to be disclosed in QuantumScape's forthcoming earnings report.
Key points highlighted include QuantumScape's shift towards a more capital-efficient approach to scaling up commercially. Moreover, PowerCo's substantial capital and manufacturing capabilities are anticipated to significantly support the scale-up process.
Finally, the continued support of QuantumScape's long-term partner and largest shareholder is viewed as a strong endorsement of the company's commercialization endeavors.
In other recent news, Volkswagen's battery division, PowerCo, has entered into a significant licensing agreement with QuantumScape Corporation.
The deal centers around the mass production of solid-state batteries using QuantumScape's advanced technology, with PowerCo licensed to produce up to 40 gigawatt-hours of battery capacity annually, potentially expandable to 80 GWh. This development could revolutionize the electric vehicle industry by addressing the persistent issue of limited range.
The collaboration replaces a previous joint venture between the two companies and is expected to integrate QuantumScape's technology into a series of vehicles from the Volkswagen Group. PowerCo's CEO, Frank Blome, has expressed confidence in the partnership and QuantumScape's readiness for large-scale production.
In related developments, QuantumScape has welcomed Sebastian Schebera, an executive from Volkswagen, to its board of directors. Despite a reported net loss of $120.6 million for Q1, QuantumScape maintains a strong liquidity position, with a cash runway extending into the second half of 2026. These are among the recent developments at QuantumScape and Volkswagen.
InvestingPro Insights
Following Truist Securities' recent Hold rating on QuantumScape Corporation (NYSE:QS), a deeper look at the company's financials and market performance offers additional insights. According to InvestingPro data, QuantumScape holds a market cap of $3.53 billion and has experienced notable stock price volatility, with a 6-month price total return of -33.21%. Despite this turbulence, the company's liquid assets surpass its short-term obligations, indicating a level of financial stability.
InvestingPro Tips suggest that while QuantumScape holds more cash than debt, a sign of a strong balance sheet, it is grappling with weak gross profit margins and is not expected to be profitable this year. Moreover, with a Price to Book ratio of 2.15 as of the last twelve months ending Q1 2024, the company's stock price is currently at just over half of its 52-week high.
Investors interested in QuantumScape's detailed financial analysis and additional tips can explore the full suite of insights on InvestingPro, which includes 9 more tips for a comprehensive understanding of the company's financial health. To delve into these resources, visit https://www.investing.com/pro/QS and consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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