After struggling mightily since peaking in late 2020, solid-state battery (SSB) innovator QuantumScape (NYSE:QS) has been attempting a comeback effort this year. Recently, an announcement by Toyota (NYSE:TM) regarding its sharp pivot toward electric vehicles (EVs) and a potential breakthrough in its SSB technology lent credibility to QuantumScape’s heavy investments in the paradigm-shifting platform. Subsequently, QS stock popped up 10% in the morning before adding on gains in the afternoon. QS stock is now up about 14% today.
According to an AP report, Toyota plans to focus sharply on battery EVs, with SSBs representing a cornerstone of this fresh directive. Amid mounting criticism that Japan’s top automaker needed to contribute more resources to fight climate change, management could apparently no longer ignore rapidly burgeoning electrification trends within the industry. As of this writing, TM stock gained about 6%.
Although the Toyota news garnered the most headlines thanks to its dominant presence in the automotive industry, QS stock represents the bigger winner. Per the AP, Toyota aims for a commercial SSB as soon as 2027, an ambitious target. Further, the company stated that charging time — a critical drawback of EVs — will get shortened to 10 minutes or less.
In addition, Toyota plans to deliver 1.5 million EVs in 2026 by expanding its battery EV lineup and developing technology.
“With the evolution of the vehicle’s operating system, the next-generation battery EV will also enable customization of the ‘driving feel,’ with a focus on acceleration, turning and stopping,” Toyota remarked in a statement.
Lending Credibility to QS Stock
For the Japanese automaker, the shift toward EVs appears rather abrupt. Late last year, former Toyota CEO Akio Toyoda stated that he’s among the auto industry’s “silent majority” in questioning the all-in narrative for EVs. Instead, Toyoda championed a diverse range of vehicles, including hydrogen-powered cars and hybrids.
On the other hand, QS stock benefits tremendously due to the underlying credibility surge. As a groundbreaking innovation, SSBs hold much promise. So far, though, these benefits predominantly reside in theoretical papers and controlled laboratory experiments. Given that the aspirational nature of SSB specialists overwhelms the substance, many investors chose to exit out.
However, with the endorsement of Toyota as a centerpiece technology, the race to commercialize SSBs received new vigor. Of course, the announcement doesn’t guarantee success for either the automaker or QS stock. If SSBs fail to deliver on its trifecta of enhanced performance (i.e., range, charging time), reliability and lower cost, then the traditional lithium-ion approach would have been better all along.
Still, QS stock has intrigued speculators since its public market debut because tech experts believe QuantumScape commands a competitive edge. Specifically, they believe it has the edge over Toyota. If so (and granted, that’s a big “if”), QuantumScape just might skyrocket.
Why It Matters
Although today’s announcement invigorated sentiment for QS stock, investors should realize it remains highly speculative. According to TipRanks, analysts peg shares as a consensus moderate sell. This assessment breaks down to three “holds,” three “sells” and, significantly, zero “buys.” Also, with Tuesday’s leap, the implied downside risk (based on the average price target of $5) is about 34% down.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
