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Apple reportedly working on an electric car sends the stock of this Bill Gates-backed battery startup surging

·Anchor, Editor-at-Large
·3 min read
In this article:
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What Apple (AAPL) may be working on has electrified one hot startup’s shares.

Apple could start production on its own electric vehicle as early as 2024, according to Reuters. The car will be powered by a “breakthrough” monocell battery design that offers up greater range than traditional electric vehicle batteries. Apple, which did not respond to Yahoo Finance’s request for comment, is also reportedly exploring the use of a lithium iron phosphate battery, which would not include hard to mine metal cobalt.

Speculation on what could easily be dubbed the iCar put a spotlight on shares of battery startup QuantumScape (QS). Shares spiked 29% on Monday and are 10% higher in pre-market trading Tuesday. The stock is up 417% over the past three months.

QuantumScape — founded in 2010 by Jagdeep Singh and backed early by Microsoft founder Bill Gates and auto giant Volkswagen — recently took a big stride in bringing a major battery technology to market. Earlier this month, Singh publicly revealed test results for QuantumScape’s solid state battery. QuantumScape’s data showed its battery cell could charge to 80% of capacity in 15 minutes. Further, it retains more than 80% of its capacity after 800 charging cycles, is non-combustable and boasts nearly double the energy density of high-end commercial lithium batteries.

The market took this initial development to mean two things (and then proceeded to send the stock soaring).

First, QuantumScape may have developed the battery that addresses some of the biggest problems with electric vehicles: speed to charge and safety. And secondarily, the company’s battery breakthrough may be leveraged across other commercial applications.

But there could now be a new wrinkle to the investment thesis on QuantumScape in light of speculation on the iCar (hence explaining the stock’s surge this week). That is automakers — already obsessed with making headway against Tesla in electric vehicles — may race to secure batteries from QuantumScape to outmaneuver new entrant Apple.

Investors who continue to pile into the QuantumScape do assume a great deal of risk, however.

For starters, the company isn’t expected to start production of its solid state batteries until 2025. And when the batteries do ship, they are likely to first go to support electric autos by Volkswagen — which owns 31% of QuantumScape’s outstanding shares after the company’s SPAC debut a few months ago.

“Unfortunately it takes a long time to get batteries into the market, we have to scale up productions and build technologies,” Singh recently told Yahoo Finance Live.

quantumscape
Jagdeep Singh founder of QuantumScape spoke to Yahoo Finance about its battery technology.

Meanwhile, it’s unclear if QuantumScape will have to raise more capital before it starts battery production given the capital intensive nature of the business. Singh said the company has $1 billion on the balance sheet and is well capitalized for its battery-making mission.

If Singh could pull off an electrifying future of super batteries, the payoff could be large. The company estimates revenue of $6.4 billion and adjusted operating profits of $1.6 billion by 2028.

A spokesperson for QuantumScape didn’t immediately return Yahoo Finance’s request for comment on whether the company and Apple could be collaborating on a battery.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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