Comparing Two Energy Stocks: QuantumScape [QS] vs. NuScale Power [SMR] | Motley Fool US Stock Information | Manekuri Manex Securities' Investment Information and Useful Media

Motley Fool US Headquarters - December 17, 2024 - From the posted article

Both are speculative energy companies, but which one has a brighter future?

QuantumScape [QS] and NuScale Power [SMR] are both aiming to disrupt the stagnant energy industry with new technologies. QuantumScape is developing solid-state batteries that could replace lithium-ion batteries, while NuScale Power is developing small modular reactors (SMRs) that have the potential to revolutionize nuclear power generation.

Both companies went public through a merger with a special purpose acquisition company (SPAC). QuantumScape surged shortly after its trading debut at $24.80 in November 2020, reaching a record high of $131.67 one month later. However, it is currently trading around $5. Please provide the text to be translated. NewsScale Power started trading at an opening price of $10.70 in May 2022 and dropped to $2 in November 2023, but it is currently around $21. Let's explore why investors have turned away from QuantumScape and are supporting NewsScale Power, and whether NewsScale Power still has buying potential. Please provide the text to be translated. The expectation is that QuantumScape will generate revenue from 2026 onwards.

QuantumScape's solid-state lithium metal battery uses a solid electrolyte instead of the liquid electrolyte used in conventional lithium-ion batteries. Therefore, it has the advantage of high stability, excellent heat resistance, and fast charging speed, but on the other hand, it has the disadvantage of being more complex in design and higher in manufacturing cost compared to lithium-ion batteries.

The energy density of lithium-ion batteries is typically between 300 and 700 Wh/L (watt-hours per liter), while the first battery developed by QuantumScape, the QSE-5, has an energy density of 800 Wh/L and can be charged from 10% to 80% in less than 15 minutes. The company has finally started production and shipment of the first small quantity samples of the QSE-5 in the third quarter of 2024.

This technology looks promising, but in order for QuantumScape to increase production, it needs to upgrade from the current "Raptor" separator process to the new "Cobra" process, and improve cell reliability, production efficiency, and overall yield. This upgrade is scheduled to be completed by 2025, with commercial battery production expected to start in 2026.

Therefore, at this point, analysts expect QuantumScape to incur annual losses of nearly $500 million from 2024 to 2026. And it is expected to ship its first commercial battery in 2026 and finally generate sales of $7 million. Please provide the text to be translated Quantumscape continues to receive strong support from Volkswagen, but faces tough competition from industry peers such as Blue Solutions (a subsidiary of Bolloré) and major automakers like Toyota (7203) and NIO in the solid-state battery market. It is unclear whether Quantumscape will be able to enter mass production ahead of its rival companies, and as a result, its stock price has plummeted by about 96% from its all-time high. However, despite such a sharp decline, the company is highly valued at $1.9 billion.

There are catalysts awaiting Newscale Power.

The SMR developed by NuScale Power is the only small modular reactor to have received Standard Design Approval (SDA) from the U.S. Nuclear Regulatory Commission (NRC). The company's small nuclear reactors can be installed in a container (building) with a diameter of just 2.7 meters and a height of 20 meters, making it easy to deploy in areas unsuitable for large nuclear reactors.

The company's design is modular, so assembling prefabricated parts on site leads to time and cost savings. However, the NRC certification currently obtained only applies to reactors with a power output of 50 megawatts.

For the company's SMR to achieve higher cost efficiency than coal-fired power plants, the power output of the reactor cluster needs to be at least 77 megawatts. The company expects the NRC to certify the SDA for the 77-megawatt reactor design by 2025. A 77-megawatt reactor requires only about 1% of the space of a conventional reactor with the same power output. Please provide the text to be translated. The ambitious plan of NuScale Power was canceled due to the soaring cost, forcing the company to abandon the construction plan of six reactors in Idaho in 2023, and to reduce the workforce by 40% in 2024. In response to these mass layoffs, the U.S. Securities and Exchange Commission (SEC) has launched an investigation into the company's employment, retirement, and confidentiality contracts.

Despite these circumstances, a new catalyst has emerged for NuScale Power, and the stock price has risen over the past year. The company has signed a supply contract for SMR parts with Doosan Enabillity of South Korea. The U.S. Department of Energy (DOE) has revealed its intention to contribute up to $900 million as a joint fund to accelerate the development of nuclear SMRs. Amazon.com [AMZN] has partnered with Energy Northwest, a state utility consortium, to develop four advanced SMRs to support the growing energy demand.

Analysts expect that the revenue of Newscale Power in 2024 will remain at a similar level to the previous year, at $23 million, but it will increase sharply to $120 million in 2025. However, the company is still in significant losses, and its enterprise value is $2 billion, which is 20 times the revenue in 2025. Please provide the text to be translated. Newscale Power is attractive as an investment destination.

Both companies are speculative investments, but Newscale Power is more attractive due to its existing revenue, limited competition, and clear expected catalysts. As for QuantumScape, it may be better to wait until the costly Cobra upgrade is completed and the first battery is released.

Disclaimer and Disclosure The article is for general information purposes only and is not investment advice for investors. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon.com, is a member of the board of directors of The Motley Fool US headquarters. The original author, Leo Sun, owns shares of Amazon.com. The Motley Fool US headquarters holds and recommends shares of Amazon.com. The Motley Fool US headquarters recommends shares of NuScale Power and Volkswagen. The Motley Fool US headquarters has an information disclosure policy.