QuantumScape (QS -3.72%) hasn’t made any new announcements this week, but the electric vehicle (EV) battery maker’s stock was still down by more than 11% as trading gets underway Friday, according to data provided by S&P Global Market Intelligence.
The company seeking to revolutionize EV battery technology did, however, make news last week. The drop through Thursday has QuantumScape shares lower by about 20% since the company reported its fourth-quarter results on Feb. 14. That day it also announced it was replacing its CEO as it moves toward commercialization of its solid-state battery technology.
Leadership change
But it likely hasn’t been the leadership change that has investors spooked. In fact, investors should see that transition as a positive sign for the company’s next phase of development.
Co-founder and CEO Jagdeep Singh is being replaced, but will remain as chairman of the board of directors. Current company president Siva Sivaram will assume the CEO role and lead QuantumScape into its commercialization phase.
EV makers’ demand projections disappoint
But this week bad news has come from another angle. Quarterly results that were released by EV makers including Rivian Automotive and Lucid Group included disheartening projections for 2024 production and sales. That could be bad news for QuantumScape at a critical phase of its growth.
Rivian estimates that production won’t grow at all in 2024 year over year, partially due to a weakened demand environment. Lucid also missed expectations for 12,000 units to be produced and expects to only make 9,000 in 2024.
QuantumScape has made progress toward production of what it believes will be a safer, faster-charging, more reliable battery design. But it needs a strong EV market to succeed. And since it hasn’t yet brought in any revenue, it is in a vulnerable place.
The good news is the EV makers citing lower demand make higher priced, luxury vehicles. Many potential EV buyers may be waiting for more affordable options. That would be a positive development for QuantumScape and its plans to begin mass producing batteries about two years from now.
Howard Smith has positions in Lucid Group, QuantumScape, and Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
