Should You Buy QuantumScape Stock Right Now?

Key Points

• After all, it has doubled and then some in price since the beginning of the year.

• But this might just be a case of paying a premium for continued potential ahead.

• 10 stocks we like better than QuantumScape ›

QuantumScape (NYSE: QS) stock doesn't look like much of a bargain at first glance. After all, it's zoomed nearly 140% in price this year. That's over 10 times the percentage rate increase of the benchmark S&P 500 index. Yikes!

But there are very good reasons for the rally, and I think QuantumScape remains a buy thanks to a future that could be -- pardon the expression -- very electric. Read on for more.

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The people's battery?

For the uninitiated, QuantumScape is a next-generation battery developer focused on the electric vehicle (EV) market. It specializes in solid state power packs, which have numerous advantages over the models currently packed into most EVs. Its batteries charge quickly, for one (in under 15 minutes, per the company's literature), and are relatively safer and longer-lasting.

Image source: Getty Images.

There are plenty of businesses, both publicly traded and privately held, that are busy developing the next whiz-bang technology for the EV space. QuantumScape accelerated past many of these in 2024. Back then it struck a deal with joint-venture partner Volkswagen for the big global automaker's PowerCo subsidiary to license its battery technology.

The deal stipulates that when and if PowerCo produces QuantumScape-designed batteries that find their way into Volkswagen vehicles, the latter company will collect -- presumably many -- milestone payments and royalties from the undertaking.

Setting the stage

Meanwhile, QuantumScape batteries aren't just fancy ideas or impressive-looking renderings in a brochure. In early September, the first real-life demonstration of one of its products was held at an international auto show in Germany. A racing motorcycle from Ducati (a Volkswagen-owned brand) powered by a QuantumScape battery was driven across the event's main stage.

All this indicates that Volkswagen has chosen QuantumScape to be at least one key battery supplier for its future. More will surely follow, as the company's technology has proven in a series of tests -- plus that live demonstration -- to be robust. So even if the company's stock looks expensive now, its business is only at the start of a journey that's long and likely prosperous.

Should you invest $1,000 in QuantumScape right now?

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.