Evercore starts QuantumScape at Outperform; says tech could cut costs ‘for the entire industry’

Evercore ISI has initiated coverage of EV battery start-up, QuantumScape Corp (NYSE:) with an Outperform rating and has set their 12-month price target for the stock at $10.00. The US company became public through a SPAC in 2020 and is headquartered in San Jose, California.

EV battery start-up is currently creating an anodeless, solid-state Lithium-Metal battery which has both significantly higher density and decreased charging times.

QuantumScape’s cells enable a substantially increased energy density, potentially exceeding conventional Li-ion batteries by 50-100%. Additionally, QuantumScape’s technology is versatile when it comes to cathode chemistry, allowing them to utilize NMC, LFP, or any other battery format to tailor solutions for specific vehicle requirements.

“While QS will initially be priced as a premium product (for higher performance), if the tech were in the hands of a mass market battery player, it could lower the cost curve of the EV battery for the entire industry.” Evercore analysts wrote in a note.

In the long run, increased energy density per cell leads to extended range for a given weight or size, offering increased engineering flexibility and cost savings in vehicle production through weight reduction.

The decrease in manufacturing expenses results from eliminating the graphite anode, equating to savings of $20 or more per kilowatt-hour ($2,000 per vehicle, assuming a 100 kWh pack). This manufacturing benefit can be applied in two ways: QuantumScape can either enhance its gross margin, potentially achieving a 30% margin (which is three times the industry average), or it can ultimately leverage this advantage for competitive pricing and market share expansion if it licenses its Solid-State technology to a major traditional battery manufacturer like LG (KS:) or Panasonic (TYO:).

Shares of QS are up 1.30% in premarket trading on Monday.