Why QuantumScape Stock Is Sinking Today

QuantumScape (NYSE: QS) stock is slumping in Wednesday's trading. The solid-state battery company's share price was down 4.2% as of 3:15 p.m. ET and had been down as much as 5.4% earlier in the day's trading.

While there isn't any fresh business-specific news for QuantumScape today, the company's valuation is retreating in conjunction with developments on the tariff front. The Trump administration is planning a new round of tariffs targeting semiconductors, automobiles, and pharmaceuticals, and the move could have a significant impact on the battery-tech specialist.

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QuantumScape stock slumps on Trump tariff news

President Trump said yesterday that his administration is planning on introducing a new 25% tariff on foreign chips, autos, and pharmaceuticals. The tariffs are expected to be under review until April 1 and then go into effect the following day. Trump also left the door open for tariffs on those goods to continue rising above that level.

The new tariffs could create headwinds for QuantumScape on multiple fronts. For starters, they would increase the cost of chips used to develop and power the company's solid-state batteries for electric vehicles (EVs). With Volkswagen seemingly waiting in the wings to be the battery specialist's first commercial customer, it could also result in lower demand from the automaker down the line. Potential reciprocal tariffs from other countries could also create headwinds for QuantumScape.

What's next for QuantumScape?

Escalating tariffs between the U.S. and other countries could wind up creating significant cost increases and unfavorable market shifts for QuantumScape. The company's operations are based in the U.S., but its biggest potential customer is based in Germany and also has production plants in Mexico and other countries.

With the business still in a pre-revenue state and an uncertain outlook for the commercialization of its battery technologies, investors could be sensitive to rising expenses in the near term. On the other hand, shifts in the tariff situation probably haven't meaningfully altered the company's long-term outlook.

For long-term investors, QuantumScape stock still has a binary outcome. If its solid-state battery tech proves to be commercially viable, the company's share price will likely soar above current levels and deliver multibagger returns for investors who buy at today's prices. If not, its share price will crater.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.