QuantumScape (QS) and NuScale Power (SMR) are two companies striving to revolutionize the energy industry with advanced technologies. While QuantumScape is developing solid-state batteries aiming to replace traditional lithium-ion batteries, NuScale focuses on small modular reactors (SMRs), which have the potential to transform the nuclear power industry completely.
Both companies went public through mergers with special purpose acquisition companies (SPACs). QuantumScape’s stock debuted in November 2020 at $24.80, surged to an all-time high of $131.67 within a month, but has since plummeted to around $5. Meanwhile, NuScale launched in May 2022 at $10.70, hit a low of $2 in November 2023, but has now rebounded to approximately $21.
Why have investors abandoned QuantumScape and pivoted to NuScale? Is NuScale still the better investment choice?
QuantumScape’s solid-state lithium-metal batteries use solid electrolytes, making them more stable, heat-resistant, and faster to charge compared to traditional lithium-ion batteries. The company’s flagship battery, QSE-5, has an energy density of over 800 Wh/L and can charge from 10% to 80% in under 15 minutes. In Q3 2024, QuantumScape began producing and delivering low-volume samples of the QSE-5 and plans to complete an upgrade of its separator process from the current “Raptor” to the newer “Cobra” process in 2025. Large-scale commercial production, however, isn’t expected until 2026.
As a result, analysts forecast that QuantumScape will report annual net losses of nearly $500 million in 2024, 2025, and 2026, with its first revenues—estimated at $7 million—arriving only after its commercial batteries launch in 2026.
Although QuantumScape has strong backing from Volkswagen, it faces stiff competition in the solid-state battery space from companies such as Blue Solutions, Toyota Motor, and Nio. Whether QuantumScape can scale production ahead of its rivals remains uncertain. This uncertainty has driven its stock price down by roughly 96% from its all-time high. Even at this level, QuantumScape remains richly valued with an enterprise value of $1.9 billion.
NuScale is the only SMR manufacturer to receive a Standard Design Approval (SDA) from the U.S. Nuclear Regulatory Commission (NRC). The modular components of its reactors are pre-fabricated off-site and assembled on-site, reducing construction costs and time. NuScale expects its SDA for 77-megawatt designs—optimized for cost-effectiveness compared to traditional coal-fired plants and occupying just 1% of the space of traditional nuclear reactors—to be approved in 2025.
Over the past year, several positive developments have driven NuScale’s stock price higher:
– New supply agreement with South Korea’s Doosan Enerbility for SMR components.
– Up to $900 million in funding support from the U.S. Department of Energy (DOE) to accelerate SMR projects.
– Partnership with Amazon and Energy Northwest to develop four advanced SMRs to meet Amazon’s growing energy needs.
Analysts project that while the company’s revenue will remain flat at $23 million in 2024, it will skyrocket to $102 million in 2025. Although NuScale is still deeply unprofitable, its enterprise value of $2 billion reflects 20 times its anticipated revenue for next year.
Both QuantumScape and NuScale Power remain highly speculative investments. However, NuScale already generates meaningful revenue, faces less competition, and has several concrete positive drivers for growth. On the other hand, QuantumScape’s outlook is clouded by its expensive “Cobra” process upgrade and uncertainty surrounding the commercialization of its first solid-state batteries.
