Once the content of futuristic movies is gone, electrification of the automobile industry today seems inevitable except for all. While Tesla (Nasdaq: TSLA) Gaining the most attention from analysts and investors, there seems to be a new headline every day about a tattoo relating to its next electric vehicle or EV. Investors wishing to take part in this new “gold-rush” can be forgiven for their reluctance to choose winners over a huge offer in hand. One way to participate in this trend may be to invest in companies that make “picks and shovels” instead of “gold prospectors”.
Every EV needs one more thing. Image Credit: Getty Images.
Every EV needs one more thing
That will be the range, or how long an EV can take on a full charge. As consumers think about buying an EV, the range becomes key for at least two reasons: First, since there aren’t as many EV chargers as gas stations, consumers feel “range anxiety” or think they might get stuck in it. Nowhere in the middle without a way to recharge.
Second, recharging an EV takes a lot longer than filling up. So, long range, big market, or the number of people who can buy, it is EV. Today, the range between Tesla and all the other EVs on the market is arguably the most objective difference.
The battery technology determines the range. But battery technology is key to another important way: it’s what makes the EVO more expensive than its equivalent gasoline car today.
Imagine an EV that can go seven hours between charges – then recharge in about 15 minutes. Now imagine that you can buy this EV for the same price as a gasoline car. What is this QuantumScape (NYSE: QS) Claims that its production will deliver to the EV industry.
A solid story
Many companies have worked on solid-state batteries for years – almost all of them have failed to produce commercially viable products. QuantumScape itself is working on lithium metal batteries, a type of solid-state battery, which the company claims will store 0% more store space than current lithium-ion competitors while significantly reducing costs. To put this in perspective, Tesla recently announced a breakthrough in battery manufacturing that should give an additional range of 54% in about two years.
80% improvement at a lower price is a tall claim for any product. However, a few things set Quantumscape apart. For one, it has attracted the investment of many high-caliber investors: it has received $ 300 million Volkswagen (OTC: VWAGY), The world’s largest auto tomer, and arguably E.V. Committed to leading the transition, as well as adventurous capitalists like Bill Gates and Kleiner Perkins. At the end of November 2020, a successful reverse merger was executed with it Kensington Capital Acquisition Corp. (NYSE: KCAC), A spec, to name just a few, includes the money of legendary investor John Dore and Tesla co-founder JB Strobel. The company’s enterprise value from the merger – or the total value of its stock, cash and debt – is 3.3 billion. And since the merger, the joint venture has achieved a market capitalization of more than 14 14 billion (the value of all outstanding shares of its value).
The company’s relationship with Volkswagen gives it another leg: a big, marquee customer. By 2029, Volkswagen plans to sell more than 22 million vehicles in approximately 70 EV models. While QuantumScape expects Volkswagen to be the first company to commercialize its products, it plans to sell its batteries to many other car manufacturers.
Its executive team, not impressive, includes many well-known Silicon Valley entrepreneurs, and the chairman of Stanford’s Mechanical Engineering Department is also on its executive team and board.
What is a catch?
While Volkswagen has successfully tested an early version of QuantumScape’s batteries, the company still has a long way to go to develop key technologies and turn them into products that can be afforded and scaled. The company’s recent merger and listing has given it રકમ 700 million in cash – new revenue, which it will work to do.
However, it also means that, at least until 2024, the company will not really have a product to sell for a while, or any meaningful revenue. Therefore, significant stock appreciation can take a few years and will be determined by the company’s progress towards product development and production goals rather than traditional financial metrics such as revenue, free cash flow or gross margin.
Is QuantumScape Dangerous? Investing in an early-stage company, or start-up, is largely about maximizing the company’s chances of success while limiting risk.
As far as possible, QuantumScape definitely checks most bucks: the team that leads SPAC and now leads the merged company reads who is like technological innovation, industry experience, execution and investment savvy. The company promises much-needed disruption to the young industry with a lot of momentum and potential for impressive growth in production. And while revenue is still many years away, the company already has a very large, marquee customer and an estimated revenue of about 2027 times. So, assuming the company hits its projected targets, its stock has a ton side down.
To keep the risk limited, however, fools considering investing in QuantumScape should probably take a more approachable approach, hedge their claims, and avoid putting all their hard-earned dollars into small fist / high-prize stocks.
