Lithium-ion batteries are better than lead-acid batteries because they are more efficient and offer greater capacity. Solid-state batteries go one better, offering even more capacity which allows for longer distances traveled on a single charge. They are also lighter, safer and offer faster charge times. However, making them at scale to power a vehicle is the challenge. QuantumScape (NYSE:QS) stock is developing solid-state batteries that will do just that but it is still in the early stages.

Its prototypes look promising but it costs money to bring it to fruition and QuantumScape is burning through cash at a rapid pace.

While the battery startup is not going under anytime soon, it needs a win shortly to boost investor confidence it can make it to the commercialization stage. Here’s why I think investors should take a wait-and-see approach with QuantumScape.

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There Is Still Time but the Clock Is Ticking

At the end of 2023, the battery maker had $1.1 billion in cash and negative free cash flow of $325 million over the past year. At that cash burn rate, QuantumScape has about three years or so before it runs out of money.

Yet the company’s cash and equivalents are down over 80% from their 2021 high. Expenses are only going to grow as it moves towards commercialization. It will need additional cash injections from either a financial back or by hitting the debt and equity markets to raise more money.

Volkswagen (OTCMKTS:VWAGY) is a big backer investing over $300 million in QuantumScape but recently signaled it is growing impatient. It was in talks with France’s Blue Solutions division of Bollore (OTCMKTS:BOIVF) about redesigning the company’s electric bus solid-state batteries for cars. It’s likely not an easy switch but perhaps easier than going from nothing to something as QuantumScape is attempting.

A Roadmap to Nowhere

The problem may be QuantumScape’s timeline for commercialization. There is none. Nothing concrete, anyway.

The battery maker wants to ship its Alpha-2 samples for testing this year and transition production to its Raptor stage battery for testing. Assuming it is successful, it will transition to Cobra stage testing in 2025 for higher volume testing. Eventually, QuantumScape wants to get to its commercial product, QSE-5.

At best, we’re looking at a 2026 to 2027 timeframe for this to happen. That runs right up against the battery maker’s diminishing cash hoard. It also can’t afford any mistakes along the way. Also, if Blue Solutions can achieve faster product development, QuantumScape might also lose its biggest financial backer.