QuantumScape's Solid-State Battery Potential: A 2025 Outlook

Finally! 2025 appears to be the year QuantumScape (QS 0.28%) investors have long awaited, the moment when the market truly recognizes the company's groundbreaking work and rewards it with significant valuation growth. QuantumScape's stock has already surged 160% year-to-date, fueled by excitement surrounding its solid-state lithium-metal batteries. These batteries hold the promise of excelling in five critical areas: energy density, charging speed, safety, lifespan, and cost-effectiveness. Essentially, QuantumScape is striving to develop the next-generation battery that could revolutionize the electric vehicle (EV) industry. However, with such a substantial price increase already realized, is QuantumScape still a worthwhile investment? Image source: QuantumScape. ## Reason No. 1: Expanding Partnership with Volkswagen A major catalyst behind QuantumScape's recent success is its strategic collaboration and licensing agreement with PowerCo, the battery division of Volkswagen Group (VWAGY -1.71%). Recent developments indicate an expansion of this collaboration. The revised agreement outlines that PowerCo will provide up to $131 million in additional payments over the next two years, contingent upon the joint scale-up team achieving specific milestones. The first milestone has already been met, paving the way for QuantumScape to receive initial payments this year. These funds are in addition to the previously committed $130 million earmarked for technical progress and execution of the original licensing agreement. This expanded partnership allows PowerCo to engage earlier in the production of QSE-5 battery cells, accelerating the timeline for QuantumScape's pilot production line. According to Morningstar, Dr. Siva Sivaram, CEO and president of QuantumScape, stated, "This expanded agreement is a clear signal of the growing strategic, technical and financial alignment between the two companies. It reflects our shared confidence in QSE-5 as a game-changing platform for the battery industry." The significance of this partnership for QuantumScape cannot be overstated. It marks the company's initial step toward its ultimate goal: the commercial production of innovative solid-state batteries. By securing a powerful partner in Volkswagen, QuantumScape gains access to the scale and resources necessary for widespread market adoption. ## Reason No. 2: Demonstrating Viable Battery Technology QuantumScape's solid-state batteries represent the theoretical ideal for electric vehicles, and potentially for applications beyond the automotive sector. These batteries utilize materials and chemical processes that facilitate increased energy storage (resulting in greater range and power), enhanced safety (reduced risk of fire or explosion), faster charging times, and significantly extended lifespans compared to traditional lithium-ion batteries. Earlier this month, QuantumScape transitioned from theoretical concept to practical reality by showcasing a live demonstration of its QS solid-state lithium-metal batteries powering an electric vehicle. At Volkswagen's press conference during IAA Mobility, a Ducati motorcycle equipped with QSE-5 battery cells, manufactured using QuantumScape's much-anticipated Cobra production process, was prominently featured. This demonstration represents a significant leap forward in battery technology, bringing solid-state batteries out of the laboratory and into a real-world setting. QuantumScape's battery technology currently boasts an energy density of 844 Wh/L and a rapid charging capability of approximately 12 minutes from 10% to 80% state of charge, with further advancements expected. The energy density of current EV lithium-ion batteries typically ranges from 250 Wh/L to 700 Wh/L, depending on the specific chemical composition. "The EV revolution is the biggest transformation the automotive industry has ever seen," said Frank Blome, CEO of PowerCo, in a press release. "Solid-state batteries will redefine what's possible for high-performance, premium vehicles, and today's historic demonstration is just the beginning." ## Implications for QuantumScape Investors Investors have been eagerly anticipating a surge in QuantumScape's valuation, recognizing the company's virtually unparalleled potential to disrupt the market with its solid-state battery technology. It has the potential to be a true game-changer. Despite the impressive 143% stock price increase year-to-date in 2025, QuantumScape's future potential remains substantial, particularly as the company begins to generate revenue and tap into the full potential of its partnership with PowerCo. While the outlook for QuantumScape and its long-term investors appears promising, it's crucial to acknowledge the inherent risks associated with high-growth companies like QuantumScape, suggesting that it should constitute only a small portion of any investment portfolio.