QuantumScape (NYSE:QS) announced a major manufacturing breakthrough with its solid-state battery technology. It announced the successful integration of its Cobra ceramic separator process into baseline cell production. This leads to 25 times faster heat treatment compared to the previous process.

Analysts are bullish since this technology would allow 500-mile-plus ranges on a single charge, which could take less than 15 minutes.

The stock is up over 31%, but it may surge more due to analysts adjusting their price targets and re-evaluating the long-term potential here post-breakthrough.

Is QS Stock a Buy Now?
QuantumScape’s success mostly depends on how the broader electric vehicle industry pans out. It also relies heavily on Volkswagen. It’s a typical pre-revenue, high-risk, high-reward bet at the moment. QuantumScape is not expected to generate notable amounts of revenue until 2028, and HSBC believes the company won’t be cash flow positive until 2031.

In my opinion, QS stock is a buy. This is mostly due to interest rate cuts being on the horizon and the company’s balance sheet containing $860 million in cash, already enough for around 2 years of losses. Moreover, the dilution here is not that bad.

The recent breakthrough has significantly reduced the long-term risk here. QuantumScape’s breakthrough will finally allow gigawatt-scale battery production to be viable if executed properly. In fact, this breakthrough could lead to partnerships beyond Volkswagen into many other companies once proven at scale.

If the stock continues rallying and management takes advantage of it to offer more equity and extend the cash runway, QS stock will be a very solid play.

— Omor IE

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Source: Money Morning