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Why QuantumScape Stock Is Falling Today

Shares of QuantumScape (QS -2.92%) opened Tuesday trading in the red and were down 4.7% as of 9:45 a.m. ET. The company’s solid-state battery technology is touted to be a game changer for the electric-vehicle (EV) industry, but the company is still testing prototypes and has missed its earlier deadlines for the commercialization of the batteries.

If reports are to be believed, QuantumScape’s longest-standing partner Volkswagen is getting impatient now and looking at other options.

Volkswagen is in talks with other battery makers

QuantumScape’s partnership with Volkswagen dates back to 2012. Over time, the automaker has invested more than $300 million in QuantumScape, committed more capital to a joint venture with the battery company, and  already tested its multilayer battery cells.

The joint venture agreement, however, stated 2018 as the original date for commercialization of QuantumScape’s technology. QuantumScape, of course, missed the deadline, and commercialization is still nowhere in sight.

Volkswagen is now pursuing alternatives and is in talks with France’s Blue Solutions, according to a report from Reuters that came out this morning. Unlike QuantumScape, which is testing its battery cells, Blue Solutions is already producing solid-state batteries for Daimler’s electric buses and has signed deals with German luxury carmaker BMW and another company for its upcoming passenger-car battery.

The report suggests Volkswagen could reach an agreement with Blue Solutions in the coming months. Although it also states that Volkswagen’s venture with QuantumScape is still on track, this is one massive development that investors in the company must watch out for as Volkswagen also holds the biggest key to QuantumScape’s growth.

A big threat to QuantumScape?

Volkswagen has already tested QuantumScape’s first prototypes, but testing and certification require time, and commercialization could be years away. Volkswagen may not want to wait so long before it can use solid-state batteries in its cars, so it’s a logical step if it is, indeed, in talks with other battery companies.

Although QuantumScape shares a strong and long-standing relationship with Volkswagen, it also poses the biggest threat to the battery maker. With more companies, including automakers like Toyota Motor, also getting into the production side of solid-state batteries, options for Volkswagen are only expanding, even as QuantumScape struggles to commercialize its batteries and fulfill commitments under its agreements and venture with the automaker.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends Bayerische Motoren Werke Aktiengesellschaft. The Motley Fool has a disclosure policy.

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