SALZGITTER, Germany & SAN JOSE, Calif. - In a significant move within the electric vehicle (EV) sector, Volkswagen (ETR:VOWG_p) Group's subsidiary PowerCo and QuantumScape Corporation (NYSE: QS) have announced a licensing agreement to industrialize QuantumScape’s solid-state lithium-metal battery technology. This partnership aims to mass-produce battery cells that could power up to one million electric vehicles annually.
The companies have outlined a non-exclusive license allowing PowerCo to manufacture up to 40 gigawatt-hours (GWh) of battery cells per year using QuantumScape’s technology, with the potential to double this capacity in the future. The collaboration is set to fast-track the production of solid-state batteries to meet the surging global demand for more efficient EV batteries.
The deal builds upon a previous joint venture between the two entities, now focusing on leveraging QuantumScape's proprietary solid-state ceramic separator technology. This innovation promises higher energy and power density, rapid charging, and improved safety compared to current battery technologies.
PowerCo, a global battery cell manufacturer founded by Volkswagen in 2022, will utilize its manufacturing and industrialization capabilities to bring QuantumScape's technology to scale. The companies are also planning a combined workforce initiative to expedite the technology's industrialization.
Frank Blome, CEO of PowerCo, expressed enthusiasm for the technology's transition to mass production, underscoring the years of collaboration and testing that have taken place. Thomas Schmall, Volkswagen Group Board Member for Technology, emphasized the agreement's role in ensuring Volkswagen's global fleet remains at the forefront of battery technology.
Dr. Siva Sivaram, CEO and president of QuantumScape, described the agreement as a major step in the company's strategy to commercialize its battery technology. PowerCo's expertise is expected to help QuantumScape navigate the shift to industrial-scale production.
In preparation for this new phase, Frank Blome has resigned from QuantumScape's board of directors, a position he held since 2020, to focus on the collaboration. His successor will be named in the coming months.
PowerCo operates three cell factories with a combined capacity of up to 200 GWh per year, located in Germany, Spain, and Canada. QuantumScape continues to work towards revolutionizing energy storage with its next-generation battery technology.
In other recent news, QuantumScape Corporation, a leader in solid-state lithium-metal batteries, has announced a strategic collaboration with Volkswagen Group's battery cell subsidiary, PowerCo SE. The partnership aims to advance QuantumScape's solid-state battery technology for use in electric vehicles.
As part of the agreement, QuantumScape will grant PowerCo a royalty-bearing license to use its QSE-5 technology for producing batteries, with an initial capacity of up to 40 GWh annually. Despite a reported net loss of $120.6 million for Q1, QuantumScape maintained a strong liquidity position, with a cash runway extending into the second half of 2026.
In board membership developments, QuantumScape recently elected Sebastian Schebera, an executive from Volkswagen AG (OTC:VWAGY), to its board of directors. This decision underscores the company's commitment to strategic growth. On the product front, QuantumScape has begun shipping its six-layer Alpha-2 prototype battery cells to automotive customers, marking a significant step towards its commercial goals.
InvestingPro Insights
In the wake of the landmark agreement between PowerCo and QuantumScape to industrialize solid-state lithium-metal battery technology, investors and industry observers are closely monitoring QuantumScape's financial health and market performance. QuantumScape, with a market capitalization of $2.7 billion, is navigating a challenging financial landscape characterized by significant operating losses. The company's operating income stands at a negative $500.95 million over the last twelve months as of Q1 2024, reflecting the substantial investments required to develop its pioneering battery technology.
QuantumScape's stock has experienced considerable volatility, with a six-month price total return of -33.21%, highlighting the risks associated with investing in this emerging technology sector. Despite these challenges, InvestingPro Tips suggest that QuantumScape holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations, providing some financial stability as it scales up production in collaboration with PowerCo.
However, analysts remain cautious, as indicated by a negative P/E ratio of -5.61 and a lack of dividends, underscoring the company's current unprofitability and the long-term nature of its growth prospects. For investors considering a stake in QuantumScape, it's important to note that the company is not expected to be profitable this year, and its valuation implies a poor free cash flow yield. As the EV market evolves, these financial metrics will be critical to watch.
For a deeper dive into QuantumScape's financials and to access additional InvestingPro Tips, visit Investing.com/pro/QS. There are 9 more InvestingPro Tips available for QuantumScape, which can provide further insights into the company's performance and potential. Interested readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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