QuantumScape Has No Revenue But Is Worth $2.8 Billion. Here's the 1 Milestone That Would Change Everything

QuantumScape (NASDAQ: QS), a developer of solid-state batteries, hasn't commercialized any of its products or generated any meaningful revenue yet. That's why its stock trades nearly 97% below its record high of $131.67 per share, which it set on Dec. 22, 2020.

But at $4.50 per share, QuantumScape still has a market cap of $2.8 billion. That's a lofty valuation for a pre-revenue company, but it might justify that premium if it finally commercializes its first QSE-5 batteries. Let's see what it will take to finally reach that milestone.

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Why hasn't QuantumScape commercialized its batteries?

QuantumScape's solid-state batteries are ideal for electric vehicles because they have better thermal resistance, higher charging capacities, and shorter charging times than conventional lithium-ion batteries. However, they're also more expensive and difficult to manufacture.

QuantumScape originally planned to produce its first commercial batteries by 2024. Still, its supply chain constraints and the technical challenges of mass-producing its ceramic separator (which prevents lithium fibers from short-circuiting the battery) caused major delays.

QuantumScape co-developed those batteries with Volkswagen (OTC:VWAP.Y) for over a decade, but it's still shipping samples instead of commercial products. In 2024, it abandoned its goal of mass-producing its own batteries and agreed to license its technology to Volkswagen's PowerCo subsidiary and other automakers.

That shift toward an asset-light, higher-margin licensing business makes sense, but QuantumScape doesn't expect its designs to be ready for commercialization until 2029. It replaced its older Raptor separator process with its newer Cobra process this year. However, that upgrade will merely help it ramp up production of high-volume samples for automakers rather than jump-start its commercial business.

Other automakers and start-ups have also been developing their own solid-state batteries. For example, Toyota (NYSE: TM) plans to launch its first solid-state battery EVs by 2027-2028. If QuantumScape can't keep up with those competitors, its stock could sink even lower.

What's the one milestone that could change everything?

For now, QuantumScape is focused on expanding its Eagle Line pilot production line for higher-volume samples and partnering with more OEMs. But for its stock to rally, it will need to achieve commercial readiness before 2029. If it doesn't reach that milestone ahead of schedule, it could be rendered obsolete by its growing list of competitors.

Without any clear plans to generate revenue before 2029, QuantumScape's market cap could shrink significantly as rising Treasury yields drive investors toward safer investments. I'd steer clear of this speculative stock until more green shoots appear.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.