QuantumScape (QS 4.17%) is working to develop next-generation solid-state lithium-metal batteries for electric vehicles (EVs). Its stock is jumping today thanks to some new help in boosting the EV battery manufacturing capacity in the United States.
Thanks to the news of that added support, QuantumScape shares jumped as much as 7.5% this morning. As of 11:50 a.m. ET, the stock was still trading higher by 4.3%.
Overcoming EV fears
QuantumScape hopes its technology will vault the EV industry to a mass consumer base. If the company can successfully commercialize its solid-state battery technology, it would lead to faster charging times with more efficient and safer batteries. That could help overcome range anxiety and boost what some see as waning demand for EVs after the early-adopter crowd has already jumped in.
The Department of Energy (DOE) just announced it would make $3.5 billion available to help that next wave of consumer demand by supporting battery makers and lithium producers. The announcement represents a second round of funding from the Bipartisan Infrastructure law passed about two years ago. The DOE announced today that it was offering another $3.5 billion in incentives “to boost domestic production of advanced batteries and battery materials nationwide.”
Not a game changer yet
That has QuantumScape shares popping today. The company is on the cutting edge of developing solid-state battery technology that could potentially be a game changer for the EV industry. Boosting the domestic EV battery manufacturing base would benefit QuantumScape once it officially commercializes its technology.
That’s not a sure thing, though. The company already has its prototype batteries in the hands of customers for testing. It expects to soon launch its first commercial product as it works to scale up its manufacturing capacity.
QuantumScape is still a very speculative investment. But its potential for success may become more clear when it reports its fourth-quarter update early next year. Until then, it bodes well that there are more funds being made available to make it able to help its customer base should it be successful. That’s what has investors buying in today.
Howard Smith has positions in QuantumScape. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.