Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Can QuantumScape make money from Solid State Batteries?

The QuantumScape Corporation (QS) could become one of the best electric car stocks.

QuantumScape (QS) claims to have a better lithium battery than the ones automakers presently use. If its claims are true, QuantumScape’s solid-state lithium batteries are smaller, safer, less-complicated, faster, and denser than conventional batteries.

The solid-state lithium batteries will charge faster and offer a longer range, QuantumScape claims. For instance, QuantumScape could the batteries could charge in 15 minutes. They also claim the Solid State batteries will last longer.

Another advantage to QuantumScape’s battery design is that it lacks an organic separator. Organic separators in lithium-ion batteries can catch fire because lithium generates heat. Engineers claim that QuantumScape’s batteries are less prone to fire because they run at lower temperatures.

The hope is that QuantumScape’s battery will be cheaper because it is simpler. A simpler design with fewer parts could reduce battery production costs. Lower prices create higher demand because more people can afford to buy the battery.

Electric Vehicle Production Booms

Investors are buying QuantumScape Corporation (NYSE: QS) because the electric vehicle (EV) market is exploding.

For example, Rivian is marketing an electric SUV, the RIvian R1S, and a pickup truck; the Rivian R1T, the Kelley Blue Book reports. Rivian unveiled the electric van it will sell to Amazon (AMZN) in October.

Amazon plans to have 10,000 Rivian electric delivery vans on the road by 2022 and 100,000 electric vans in service by 2030, The Verge claims. Ford (NYSE: F) has invested $500 million in Rivian.

Meanwhile, Amazon is part of another $2.15 billion funding round at Rivian. The Verge estimates Rivian has attracted $5.35 billion in funding since the beginning of 2019.

Ford Goes Electric

Importantly, historic automaker Ford (F) will market two all-electric vehicles soon.

The E-Transit is the all-electric version of the best-selling cargo van in the United States: the Ford Transit. The Mustang Mach-E is the electric version of Ford’s iconic muscle car. I think the Mach-E could be a template for electric police and rental. In particular, the Mach-E resembles the pursuit cars many American cops drive.

A network of 2,100 Ford EV-certified dealerships and over 13,500 charging stations will support the E-Transit and Mach-E. In addition, there are 13 companies that can retrofit E-Transit for speciality uses such as delivery.

The Incredible Ford F-Series

In addition, Ford plans to launch an all-electric version of its popular F-150 pickup truck in 2022, Inside EVs claims. The all-electric F-150 could be the most powerful Ford pickup yet because it will have dual motors.

I think the all-electric F-150 could take EVs mainstream because is the F-series pickup is the most popular vehicle in America. Ford sold 909,330 F-series in 2019, and 186,562 F-Series trucks in the first quarter of 2020, The Detroit Free Press estimates.

The F-Series is so popular it could be the 80th largest company in the United States in terms of sales, The Detroit Free Press claims. F-Series revenues are larger than Nike, Coca-Cola, Starbucks, Tesla, MasterCard, Netflix, VISA, Uber, CapitalOne, Twitter and Southwest Airlines, Ford claims.

I think Ford is laying the groundwork for a nationwide roll-out of an electric F-Series pickup. A network of over 2,100 dealerships and over 13,500 charging stations could support the electric pickups. If the electric F-Series is as popular as the gas and diesel F-Series it could become the most popular electric vehicle.

Ford’s Electrics could be Good News for QuantumScape

That could be good news for QuantumScape because Ford will need batteries to power all those pickup trucks. QuantumScape could make money by selling Ford the batteries.

Ford could buy QuantumScape’s solid-state battery because they are denser and smaller. Using smaller batteries could enable Ford to build electric pickups and vans with more cargo space, which will be a selling point.

Smaller batteries could also help Ford make the pickups and vans more powerful. I consider power one of EV’s most potent selling points. People love more powerful vehicles and will pay extra for them.

A Lariat variant of the Ford F-150 now costs around $60,000. The Detroit Free Press claims Ford cannot produce enough F-150s to keep up with consumer demand.

QuantumScape Partners with Volkswagen

Ford’s electric plans could be good news for QuantumScape (QS) because they show an established automaker is serious about EVs.

Mr. Market is one person who believes in the potential of EVs. In 2020, QuantumScape’s share price rose from $4.40 on 14 August 2020 (after the IPO) to $120.88 on 22 December 2020. QuantumScape’s price dropped to $114.77 on 24 December 2020.

Auto companies share Mr. Market’s faith in QuantumScape The world’s largest automaker Volkswagen Group has invested over $300 million in QuantumScape, a press release claims. Volkswagen AG (XETRA: VOW) plan a joint venture for industrial level production of solid-state batteries.

Volkswagen and Ford are collaborating on commercial and electric vehicles including vans, a press release states. In particular, Ford and VW will build a new electric vehicle based on Volkswagen’s Modular Electric Drive tool kit starting in 2023

In addition, Volkswagen plans to build an electric-pickup on Ford’s Ranger platform in 2020. Beyond that, I think Ford and Volkswagen could market the E-Transit in Europe together.

Thus, QuantumScape could have the world’s largest and sixth largest automakers for customers. estimates Volkswagen AG is the world’s largest automaker with annual sales of 10.8 million vehicles in 2019. Ford is the sixth largest automaker with annual sales 5.7 million vehicles in 2019.

Can QuantumScape Make Money?

Unfortunately, I cannot tell if QuantumScape (QS) makes money. Stockrow offered no financial data for QuantumScape on 24 December 2020.

Thus, I cannot recommend QuantumScape or say anything bad about it because there are no financial numbers. However, there are two excellent companies with close ties to QuantumScape you can invest in.

First there is Ford (F). Mr. Market paid only $8.86 for Ford shares on 24 December 2020. YetFord reported quarterly revenues of $37.501 billion, a quarterly gross profit of $6.278 billion, and a quarterly operating income of $2.351 billion on 30 September 2020.

Ford is also a cash-rich company with $44.831 billion in cash and short-term investments on 30 September 2020. Moreover, Ford paid a quarterly dividend of 15₵ until 29 January 2020.

Ford is the Best Electric Vehicle Stock

I consider the Ford Motor Company (NYSE: F) the best electric vehicle stock around. Ford is cheap, cash-rich, and dividend paying and it owns one of the valuable vehicle brands on Earth the F-Series.

Volkswagen AG (VOW.DE) was trading on European exchanges for $169.70 a share on 24 December 2020. VW reported annual revenues of $215.420 billion, an annual operating loss of $21.194 billion and an annual gross profit of $11.930 billion on 31 December 2019.

Volkswagen is also a cash rich company with an operating cash flow of $17.983 billion on 31 December 2019. Unfortunately, Volkswagen has not paid a dividend since May 4, 2018 when it paid an annual dividend of $4.67.

I advise people who want to invest in the electric car revolution to investigate Ford. Smart investors will avoid QuantumScape because little information about that company is available.