QuantumScape Stock Is Super Charged. Here’s Why.

An inside look at a QuantumScape lab. (Courtesy QuantumScape)

QuantumScape , a company that makes batteries for electric vehicles, gave a live demo Monday that clearly made investors happy.

QuantumScape and “PowerCo SE,” Volkswagen’s battery company, took the opportunity at Munich’s IAA Mobility auto show to show how QuantumScape’s solid-state lithium-metal batteries powered an EV.

“This demonstration represents a significant advancement in battery technology, showcasing the first anode-free solid-state batteries to move from laboratory discovery to real-world vehicle,” said QuantumScape in a statement.

QuantumScape stock rose 21% Monday, closing at $9.49, while the S&P 500 and Dow Jones Industrial Average gained 0.2% and 0.3%, respectively. QuantumScape shares traded as high as $10.68 on Tuesday, before giving up some recent gains. Shares were down 9.6% in midday trading at $8.58 a piece. Shares entered the week at $7.84.

Anode-free solid state, in this instance, means the batteries have no liquid electrolyte and no traditional graphite anode, facilitating the flow of electrical charge.

Solid-state EV batteries promise lower costs, more per-charge range, and a better safety record. They represent the possibility of making them more capable and cheaper than comparable gasoline-powered cars.

Solid-state batteries haven’t been commercialized yet. Consequently, QuantumScape doesn’t generate significant sales. Wall Street projects sales increasing to $4 billion by 2030 from $4 million in 2026, according to FactSet.

The growth curve is steep, and investors have to deal with incredible volatility in QuantumScape stock. Shares have ranged from $3.40 to $15.03 in the past 12 months.

Adding to volatility is the short interest in QuantumScape stock. Bearish investors borrow stocks they expect to decline and sell them “short,” hoping to repurchase shares, to repay the loan, at a lower price in the future. Short interest generally refers to the amount sold short relative to the amount of stock available to trade.

About 13% of QuantumScape stock available to trade has been sold short. That’s multiple times the average short interest in a typical stock.

Coming into Monday trading, QuantumScape stock was up about 51% this year and up about 46% over the past 12 months.

Write to Al Root at allen.root@dowjones.com