Shares of QuantumScape (QS) were down 1.5% in pre-market trading after Evercore ISI analyst Chris McNally downgraded the stock to a Hold rating from Buy, citing its high valuation. Conversely, McNally raised his price target from $8 to $12, since he sees important uses for QS’ technology in areas like humanoid robots, drones, and energy storage systems. The revised price target implies 4.6% upside potential from current levels.
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QuantumScape develops next-generation solid-state lithium-metal battery technology primarily for electric vehicles (EVs). QS shares have surged nearly 187% over the past six months, driven by breakthroughs in commercialization, manufacturing processes, and lucrative partnerships.
QS’ Current Valuation Justifies a Hold
McNally acknowledges that QuantumScape’s proprietary solid-state battery technology continues to show advantages over competitors. However, his updated valuation model assumes combined EV production of 1.5 million units by 2030 from Volkswagen (VWAGY) and one additional original equipment manufacturer (OEM), equating to roughly a 4% to 5% market share. McNally noted that current share prices already reflect the success of three or more major OEM partnerships, an outcome seen as optimistic given existing timelines and technical hurdles.
QS has a licensing agreement with Volkswagen AG’s battery subsidiary, PowerCo, with a start of production expected in 2029 or later. It has also entered a joint development agreement with an unnamed second OEM and continues discussions with a third top‑ten manufacturer.
McNally suggested that further growth for QS would likely require either an expansion of the total addressable market (TAM) by 10% to 20% through applications in areas such as drones, humanoid robotics, AI infrastructure, or battery energy storage systems, or an acceleration in partnership timetables. The latter appears unlikely due to Volkswagen’s stringent design requirements for its “Unified Cell” platform.
Recently, HSBC analyst Wesley Brooks also downgraded QS stock from a Hold rating to Sell, citing similar challenges. To conclude, QuantumScape’s further upside will largely depend on clear progress in production milestones and expanding adoption beyond initial automotive applications.
Is QS Stock a Buy, Hold, or Sell?
Analysts prefer to remain sidelined on QuantumScape stock currently. On TipRanks, QS stock has a Hold consensus rating based on one Buy, four Holds, and two Sell ratings. The average QuantumScape price target of $10.50 implies 8.5% downside potential from current levels.
