If you're an investor with a healthy appetite for risk, and are looking for potentially massive long-term investments, QuantumScape(NYSE: QS) and Rivian Automotive(NASDAQ: RIVN) should be two stocks on your radar. Both could end up explosive, in a good way, or burn a hole in your pocket. Here are a couple of reasons each could be a strong buy in 2025.
QuantumScape: The future?
QuantumScape has been quietly developing promising solid-state lithium-metal batteries that would drastically improve the status quo with increased energy density, faster charging times, and improved safety.
Don't take those words lightly: If its solid-state batteries make it to commercial production, they could revolutionize the battery industry. The company is strategically working its way from development to commercialization, when it could reward patient investors.
Some great news was announced earlier in December when QuantumScape said equipment for Cobra -- the second phase of sample production -- had been delivered, installed, and released for initial processing. Essentially, this means the company is about ready to go with higher-volume sample production in 2025. It's just one more step for the company to reach commercialization, when it can scale up production and begin generating sales and revenue.
Speaking of commercialization, arguably the biggest development for the company in 2024 was a groundbreaking agreement with Volkswagen Group's battery company, PowerCo. Under the nonexclusive license, PowerCo can manufacture up to 40 gigawatt-hours (GWh) per year using QuantumScape's technology, with the option to double it, the latter being enough to equip one million vehicles per year.
An overlooked aspect of this deal is the nonexclusivity, which young start-ups don't always have the leverage to negotiate. This leaves the door open for many more partnerships and deals along the way.
Currently, the company is still preparing its second phase of sample production to send to potential customers, but it's taking real steps -- and doing so on schedule -- toward commercial production. There's no guarantee this technology ends up a winner, but things look good so far as testing goes, and if management continues to execute, long-term investors could end up huge winners. For more on QuantumScape, this is a must-watch.
Rivian: Not the next Tesla
Rivian is not likely to be the next Tesla, so let's get that out of the way initially. However, that doesn't mean the start-up electric vehicle (EV) maker can't carve out its own very valuable niche in the industry.
Already its R1T electric pickup truck and R1S electric SUV have won numerous awards; ranked atop the industry in customer satisfaction, per J.D. Power and Consumer Reports, and have been upgraded to a second-generation version.
Beyond its current SUV and truck lineup, the company has some very important products in its pipeline: the R2, R3, and R3X. All are expected to be priced at $50,000 or below and will dramatically expand the company's target audience and market.
With all the cost-cutting and advancements in software and hardware, the vehicles will be more profitable per unit as well. In fact, in part thanks to the upgrades done on the first-generation vehicles, Rivian expects to be gross-profit positive during the fourth quarter, which would be a huge step in proving the company has a viable path toward profitability -- which, to be clear, is years away.
The company has also made some important partnerships and deals. It has joined Volkswagen Group for a total deal of up to $5.8 billion, combining its software and electronic architectures and Volkswagen's scale and deep pockets. The two plan to create the next generation of software defined vehicles.
In addition to its Volkswagen deal, the company also received a conditional commitment for up to $6.6 billion in loans from the U.S. Department of Energy to support the construction of its Georgia factory.
Rivian is quietly setting itself up for a strong 2026 and beyond.
Buy in 2025?
Both of these stocks are high-risk and high-reward. Both could end up with little value if they fail to live up to their individual expectations. On the flip side, if QuantumScape finalizes its technology and is able to commercialize production, it could revolutionize the EV battery industry. And Rivian, while it won't be the next Tesla, could end up a very lucrative player in the pure-play EV world.
These are highly speculative stocks and should be limited to a small position in any portfolio, but 2025 brings a unique opportunity to buy both. QuantumScape continues to inch toward commercialization, and 2025 will be the next step in completing its sample testing phase. And 2025 will be a quiet year for Rivian, perhaps, as it gears up to launch its pipeline of vehicles in 2026.
If you have a healthy appetite for risk, keep these two stocks on your radar in 2025.
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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 recommends Volkswagen Ag. The Motley Fool has a disclosure policy.
