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QuantumScape (NYSE:QS) stock is surging higher by over 25% after the company announced that it had reached an agreement with battery company PowerCo, which is wholly owned by Volkswagen (OTCMKTS:VWAGY).
The agreement notes that PowerCo will be able to utilize QuantumScape’s technology platform to mass produce batteries once QuantumScape accomplishes “technical progress and certain royalty payments.” These technological advancements will be used to produce the QSE-5, which is QuantumScape’s first planned product.
“Under the non-exclusive license, PowerCo can manufacture up to 40 gigawatt-hours (GWh) per year using QuantumScape’s technology with the option to expand up to 80 GWh annually, enough to outfit approximately one million vehicles per year,” said QuantumScape.
The new agreement replaces a previous battery manufacturing joint venture between QuantumScape and Volkswagen.
Volkswagen has collaborated with QuantumScape since 2012 and invested $100 million into the company in 2018. It added another $200 million in 2020 and currently owns 17% of the company.
QS Stock: QuantumScape Reaches Battery Deal with Volkswagen’s PowerCo
The two companies will band together to create a joint team to allow PowerCo to produce batteries using QSE-5 technology. Any intellectual property that is jointly developed will be jointly owned.
Upon achieving certain technological milestones, PowerCo will pay QuantumScape an initial $130 million royalty. Future royalties will be credited against this payment.
“QuantumScape’s technology is poised to enter a pivotal stage where PowerCo’s specialized expertise, resources and global factories can help facilitate the transition to industrial-scale production,” said PowerCo CEO Frank Blome.
As part of the agreement, Blome has agreed to step down from QuantumScape’s board in order to focus on his responsibilities at PowerCo. QuantumScape and Volkswagen currently have an agreement that allows Volkswagen to appoint two directors to QuantumScape’s board. QuantumScape plans on announcing Blome’s replacement in the coming months.
The agreement provides a massive boost to QuantumScape and QS stock as the firm works to release the QSE-5. The company believes that the agreement will help it accomplish gigawatt-hour-scale production of solid-state technology that will be used toward electric vehicles (EVs).
The excitement isn’t over yet, though. QuantumScape will report its second-quarter earnings on Wednesday, July 24.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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