Why QuantumScape's Focus on Producing Samples in 2025 Could Be a Game Changer for This Auto Market Supplier

When QuantumScape (NYSE: QS) reported its 2024 financial results, it highlighted some key achievements. The big ones were all around producing samples of its various solid-state battery products. Given those were the big wins, it shouldn't be too surprising that the company lost roughly $475 million in the year.

In 2025, the big goal is to produce even more samples. That 2025 goal could be more important than you think. Here's why.

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What does QuantumScape do?

QuantumScape is attempting to make high tech, solid state batteries. The main target market for these batteries is electric vehicles (EV). That's an important factor to consider when looking at the stock because, essentially, the company is trying to become an original equipment manufacturer, or OEM.

Image source: Getty Images.

Cars are highly regulated, and the safety requirements automakers have to meet are lofty. There's a good reason for that given how dangerous it can be when something goes wrong. That includes both malfunctions and human error on the part of the driver. Carmakers, by necessity, spend a lot of time vetting their OEM suppliers.

This is where things get complicated for an upstart supplier like QuantumScape. There is a massive OEM infrastructure already in place. When a part gets approved by an automaker and included in a car, it tends to be hard to displace. And when a carmaker has a supplier it knows it can count on, it tends to go back to that supplier again and again. Once an OEM has a part that's been built into a car, it usually has a reliable long-term income stream around that part.

QuantumScape is making samples, for now

This is where QuantumScape's opportunity and problem lie. While EVs are new, there is an OEM supply network around them. QuantumScape is attempting to break into that supply network. It is still relatively early for EVs, so there is an opportunity to get one of the company's batteries into a vehicle manufacturing process.

The way to do that is to make samples for automakers to test out. That's what QuantumScape has been doing and what it plans to keep doing in 2025. In fact, the company specifically states that "our most significant operational milestone is to ship Cobra-based B1 samples of the QSE-5 cell." This sounds underwhelming for a company that is attempting to become sustainably profitable. But it has to happen, and it could literally be the most important step of the process.

At this point, it has entered into a partnership with PowerCo, a battery maker operated by Volkswagen. The goal is to prove that QuantumScape's battery technology can be integrated into Volkswagen's automaking processes. QuantumScape hopes that this will be a "blueprint" for similar deals with other companies. If this partnership goes well, QuantumScape will be one step closer to its 2026 goal of a "first customer launch." If it achieves that 2026 goal, it will mean the OEM has created a reliable, and likely long-term, income stream.

Watch the samples making progress like a hawk

While it sounds like a small achievement to produce samples, QuantumScape's samples are the key to its future success. If its samples live up to EV maker expectations, it will find ready buyers of its batteries. Often the biggest test is getting that very first customer to sign on. As such, the partnership with Volkswagen could be a make or break deal for the OEM upstart.

QuantumScape is only appropriate for more aggressive investors, and 2025's sample progress is something you will want to pay very close attention to if you buy the stock.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.