Key Points

QuantumScape's solid-state battery would improve range, cost, and safety. It is building toward commercialization and has a cash runway until late 2028. EV maker Lucid has enjoyed five consecutive record quarterly deliveries.

It seems almost certain the future of transportation is via electric vehicles (EVs). EVs have swept over countries like China quickly, and the U.S. more slowly, but global EV sales are on the rise and show no signs of reversing. Here are two stocks well-positioned to thrive in the future of electric transportation.

Revolutionary battery

QuantumScape(NYSE: QS) is a next-generation battery company focused on bringing its solid-state battery design to commercial production. It's a no-brainer in terms of product, as the solid-state battery will eliminate costly components as well as improve charging time, range, safety, and energy density. In other words, if QuantumScape can execute its technology and move to commercial production, automakers will be lining up at the door for its batteries.

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When it comes to 2025 goals, the company is progressing well. It's ahead of schedule in bringing the Cobra separator process into baseline production, which it expects to do during the second quarter. It also remains on track for its goal of shipping QSE-5 BI samples, which are intended to demonstrate the performance capabilities of the QSE-5 in a real-world application.

Another good sign for the company's ability to bring its technology to commercialization is the number of partnerships it has. In fact, QuantumScape just announced an agreement to explore a collaboration with Murata Manufacturing for ceramics production. Essentially, it's a collaboration with a company that owns decades of experience in manufacturing ceramics for electronic components, energy storage, and industrial applications. If the partnership helps push QuantumScape's battery technology closer to commercialization, it'll be a highly valuable collaboration.

Last but not least, the company has some runway before it has to worry about cash. The company ended the first quarter with over $860 million in liquidity and expects its cash runway to extend into the second half of 2028. It's a big if, but if QuantumScape can bring its technology to market, it has the partnerships and joint ventures to thrive as the world transitions to EVs and demands better battery technology.

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Taking in fleeing consumers

When investors think of EV automakers to invest in, Lucid Group(NASDAQ: LCID) might not make the top of your list. That's fair, as the company's early years were plagued with production disruptions, delays, and disappointments.

But don't look now: the company is gaining traction and has momentum in its favor. Lucid delivered 3,109 vehicles in the first quarter, a strong 28% gain over the prior year, and it marks the fifth consecutive record quarter for deliveries. It has serious momentum. There are two additional developments that work in Lucid's favor.

The first development is that it seems what negatively impacts Tesla works in Lucid's favor. "Tesla owners always have been a source of customers for us," said Lucid's Interim CEO Marc Winterhoff during a Fox Business interview. "We saw a dramatic uptick in the last two months. Right now, 50% of all the orders that we have are from Tesla owners."

As Tesla owners increasingly see owning a Tesla vehicle as political statement, its vehicle lineup is aging, and its Cybertruck was a commercial flop, Lucid has been plucking consumers looking for an equally advanced EV alternative to Tesla.

Another development working in Lucid's favor is that deliveries of its Gravity SUV are set to hit at the end of April and continue to accelerate through the coming months. That very likely means Lucid will continue its streak of record delivery quarters, especially considering the Gravity will have a much bigger addressable market than the company's Air sedan.

Not without drawbacks

Both of these companies are high-risk, high-reward investments and should remain a small position in any portfolio. There's a very real risk that QuantumScape fails to do what has yet to be done with its solid-state battery technology. There's even risk that another company has a breakthrough and beats QuantumScape to the market. But if QuantumScape delivers on its vision, investors will be handsomely rewarded.

For Lucid, the company continues to burn cash and needs its Gravity to be a hit with consumers. But if it keeps its sales momentum going and continues through its product pipeline of vehicles following the Gravity, it could have a very bright future.

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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

2 High-Risk, High-Reward Electric Vehicle Stocks for the Future of Transportation was originally published by The Motley Fool

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