Conference Transcript - QS 2026-06-11

Operator

Yeah, happy to kick off the next session with QuantumScape. We have today the CFO, Kevin Hedrick, obviously a leader in solid-state batteries. And I think you're going to kick it off with a short presentation, is that what you said?

Jagdeep Singh, CEO

Yeah, just a few-minute overview of the company. So, Colin, first of all, thank you for inviting us to the conference. It's our pleasure. So, QuantumScape started 15 years ago to give the world much better batteries on all the dimensions you'd care about, smaller, lighter, faster charging, safer, longer-lived, and lower cost. To do so, to make that type of dramatic change on all the elements, we wanted to change the chemistry from the lithium-ion batteries we use today to what are called solid-state lithium-metal batteries. A brief primer on the difference. So a lithium-ion battery, You have an anode. You have a cathode. The way batteries work is when you charge them, lithium ion goes from the cathode to the anode when you charge it, like rolling a ball up a hill. When you want the energy back, it goes in the opposite direction. It's called a lithium ion battery because when you charge it, the lithium is stored in an ionic state. It's held in a graphite, silicon, organic electrolyte layer. What we're working on commercializing is solid-state lithium metal. It's called lithium metal because in the charge state, instead of being that kind of sponge of host material, there's nothing there as we manufacture the device. It's instead stored as a very thin layer of lithium metal. You save weight and volume from the anode that you eliminate. you improve charge time because there's less distance for that lithium ion to travel you improve safety because you've removed organic material from the anode and you improve life because one of the major sources of life loss is in that anode that we eliminate so that's and then the elegant thing is you get all those benefits by not making something so all the bill of materials that goes into the anode all the transformation costs that go into the anode go away. And to make that system work, the real engineering and process challenge is what is that middle layer that enables that lithium metal anode to work, and that's where the solid state part comes in. So we've developed a very thin ceramic layer that enables that system to work, and that's really the core IP. So I'm sure we'll get into all the other aspects of where we are in terms of customers and pilot line and business model and focus as we as we get into the

Operator

rest of the conversation. Sure maybe just to kick it off I mean I think you were was it founded in 2010. That's right. You had the Volkswagen partnership in 2012. That's right. There was a ton of excitement then and I think you had prototypes ready by 2020. Where do you stand in sort of the launch timeline because I think it's taken a little bit longer than expected.

Jagdeep Singh, CEO

Yep. So when the company was started 15 years ago, it wasn't clear that a material even existed that would let you meet a demanding application like automotive. So the first five years or so were trying to answer the question, does a material even exist? Worked down to a subset of materials and found one that we thought we had promise. In 2018, actually Volkswagen in a press release made public that they had seen this chemistry uh working so i'll say lithium metal and it was very promising they also announced um kind of our relationship publicly for the for the first time in uh 2020 as you mentioned um the prototype maturity at that time were kind of larger single areas uh the remaining work to do at that time was to make multi-layer devices and to continue to work on the maturity of the cells as well as on how they're made. We then moved into automotive A-sample stage in that kind of 22-23 type time frame, and in parallel we were making advances in how that ceramic part is made. The company's had to do a number of things that were thought to be impossible in addition to the material. Can you make it thin while it still functions? Can you multi-layer it? can you make that ceramic part continuously, and can you do so with no excess lithium metal in the system, all of which we believe are required for a compelling product. So we first took, we demonstrated the continuous processing. We made an 8x improvement in that processing. We like to use very fast animal names to describe our separator process. The first one was Raptor. And then in 2025 made an improvement on that, a further 25x improvement in a process called Cobra. If you combine Raptor and Cobra together, 8 times 25 is 200. So we were then 200 times faster than the conventional continuous process that we had, which we think is an important step towards automotive commercialization to have a very scalable process with which to make the ceramic we announced the first product in 2024 the qsc5 published kind of published specs 844 watt hours per liter just over 300 watt hours per kilogram charges between 10 and 80 percent in just over 12 minutes and we talked about the exciting safety profile of those devices notably if you get them quite hot quite uniquely in our system you don't have a kind of a cascading um safety event because the reasons that i mentioned earlier uh just in just earlier this year uh well actually let me um so that was the first product in uh announcement 2024 we had the global debut of a of a vehicle demonstration at the munich auto show last september where we power a solid state v21l race bike across the stage a pretty passionate, a pretty emotional moment. Having started 15 years ago, it doesn't materially exist, to actually see it in the Ducati. That was a wonderful partnership with Audi, who did the system. Ducati, of course, who did the bike, and together with our colleagues, PowerCo, did the cells. I should talk about, and then we just inaugurated inaugurated a highly automated pilot line just this February called the Eagle line. So that sets us up kind of nicely for the next steps of commercialization. I would say that we consider ourselves in that commercialization phase now. In Q3, we started receiving payments. That first one was from the Volkswagen group. Our business model is one of collaboration and licensing. That was the first example of a collaboration payment where we take our broader technology platform and then work with customers who give us payments to either make developments specific to them, to sample prototypes, to demonstrations like the one that you see with Ducati. That's near-term validation. It's cashed into the company. And then we're working to set up that longer-term licensing model. So I'll stop talking and let you ask some more questions.

Operator

You mentioned PowerCo. Is that the Volkswagen battery group?

Jagdeep Singh, CEO

Wholly-owned battery group. So we've been working with Volkswagen since 2012. They've invested in multiple private rounds as the company, more than $300 million of investment. And then we've struck a collaboration licensing agreement first in 2024 and then upgraded it in 2025. There are two components to that. One are these collaboration dollars. The contract has a cap on those of up to about $131 million, where we can collect those against kind of milestones scheduled in the contract. investors started getting insight into that again with that first payment in Q3 of last year of roughly ten million dollars and cumulatively in the last three quarters across all kind of customers and partners we've done about thirty million dollars that so that's the collaboration partner part of it there's a team from VW Power Co they're wholly owned battery business on site in San Jose right now I guess maybe a little early for them but arriving soon to work kind of shoulder to shoulder with our team on that pilot line on the the right side of the chart the licensing side by far the larger economic opportunity they have a license kind of once once triggered of up to 85 gigawatt hours five of which can be used for non-automotive applications if they choose and there's a royalty structure there in place so that's that's our most mature and advanced automotive partnership by far we do work with four of the top 10 global automotive OEMs we think of it as in terms of a stage progression at the stage before that larger scale collaboration and licensing agreement we have two in a joint development stage where we're doing confidence building steps with that partner towards that larger scale VW style agreement and at the stage before that is the the fourth OEM which is a technology evaluation agreement which we just completed successfully with that fourth top 10 global OEM they had teams on the ground they're making comparisons with us versus other technologies that ended successfully so that's uh that's the automotive

Operator

uh side of the story there so the the thing you mentioned the eagle line is that yeah that is

Jagdeep Singh, CEO

with powerco or is that your own line it is our own line and we're working kind of shoulder to

Operator

shoulder with powerco so the um that's a powerco will be making the batteries for the ducati uh so

Jagdeep Singh, CEO

for the ducati that we demonstrated you can think of the the teams working together to stand up the line to operate the line etc and then those parts went ultimately into the Ducati and there's additional work that the teams are kind of working on after that one of the next goals is to do is to field test that Ducati which is something that the teams are are both working on our business model is to what we're working to is to one of our four public goals this year is to continue to advance our automotive partnerships that includes both Volkswagen notably with that field testing and continue to making steps towards granting that license and then to continue to advance those those other automotive partnerships including those other top three global OEMs and there are people earlier in the funnel too just because I mentioned one of the of the four goals the other three would be to expand into other high-value markets where we think the the technology is a great fit the adjacencies we've heard us talk more about in the last two earnings calls are aerospace and defense and AI data centers we can talk more about that if if you'd like and by the way it isn't a coincidence that we started talking about that more with us inaugurating the pilot line that's the first time that we have line of sight into parts supply kind of beyond VW, beyond those other OEMs where we have that sampling type capacity to engage others. Demonstrating scalable production off that Eagle Pilot line. The goals of that line are to continue to mature development, kind of keep coming down the cost curve, to do that type of prototyping and sampling with customers, then automotive, outside of automotive, and to ultimately do that tech transfer type activity. Of course, we're working on all the efficiency metrics you'd imagine we have to in order to hit our annual guidance to produce quite a bit more parts with relatively flat guidance. But the real proof is in the pudding as you see other partners sign on to the ecosystem and other OEMs engage with us in that kind of commercial progression. And then the fourth and final goal is to move beyond the QSC5. We are a technology licensing company. our first product, the QSC5, we think in combination may have performance attributes that are beyond what lithium ion can ever do. For us, in a very exciting way, that's just the start of our technology S-curve. You've heard us talk about a few vectors, changes in form factor. The QSC5 is about a five amp hour cell. Of course, making those parts larger, as some OEMs have requested, it is one vector. If you read our Ks and Qs, there's other things you can do on the cathode side. Once you've eliminated the anode as manufactured, that's theoretically as good as it gets. So a lot of the action goes to the cathode side, both the ion conductor and the cathode material. So stay tuned on that over the rest of the year.

Operator

Can we just maybe start, take a step back, just broadly, what is the opportunity going to, you know, solid states or solid metal, is that what you're saying? Yeah, solid state lithium metal.

Jagdeep Singh, CEO

So by eliminating the anode, as I mentioned, you save weight and volume. So that's, I think, people intuitively get. If you're designing a product, that might open up products that you can't have. Maybe I'll keep the example of automotive going. You can either shrink the battery pack, or alternatively, you can put a whole bunch more range into the vehicle that you otherwise couldn't couldn't do charge time like the experience at a gasoline station probably five or six minutes to refill we think is you while holding that world-beating kind of energy density constant getting into that 12-minute type zone you're starting to get in the zip code of the experience that you'd have on like a road trip and we think Further progress there, of course, is helpful. Dan, actually, in fact, if you show that Pareto curve, that could actually be a nice way of showing it. Safety, that's also, of course, want safe cells and systems by removing the organic material from the anode, as well as substituting today's kind of plastic-like separator that's got membranes in it with a ceramic part. we think those are both steps towards safety and then on life there's real value to add to electric vehicles and other applications by extending their life for a few reasons one is it helps dramatically with the resale value we found in vw published testing of our a sample data we were having about one quarter the fade relative to automotive specs over extended cycling so you You can imagine that helping the resale value of the car or other emerging use cases if the cars themselves are just driven a lot more per year, for example, under an autonomous type use case. That's a pretty compelling benefit. And then at scale and at maturity, because we have the bill of materials for our ceramic is an earth abundant material found on all the continents with multiple different suppliers and then our method of making, we're really leaning into its efficient manufacturer with that very high speed heat treatment process we believe at scale and at maturity of that process we can actually be both lower cost than the conventional lithium ion at the time as well as much higher performance in all those dimensions and that that'll be a pretty big sea change moment

Operator

where do you see current like lfp today in terms of cost and where where you're aiming to get your

Jagdeep Singh, CEO

technology to go uh good question so um uh maybe a global price is in the zip code of 80 and within china would be kind of lower um the bulk like if you look at um other chemistries uh costs of uh nickel manganese cobalt for example or the nickel rich chemistries that drives up the price of the cell and also improves performance i would like to highlight that our platform is cathode agnostic the vast majority of our publicly disclosed data is on a nickel rich cathodes we're trying to push the limits of performance we have shown data with our uh solid state separator or lithium metal anode paired with an lfp cathode just to remind investors that that is a platform in that in that collaboration phase it's uh we have discussions with a customer in terms of which cathode would you want how do you want to trade off power versus energy what's the form factor you'd like that that would be in the standard type of customization that that that we would do if a customer's optimizing for for cost you could go towards one of those less expensive options they wanted to push towards energy which most of them do in our conversations you'd end up in those in that nickel rich type camp but as i mentioned the goal is with maturity and with scale would be to offer both higher performance and a lower cost solution but any color on

Operator

can you get to $60 kilowatt hours any public targets there it's it's a

Jagdeep Singh, CEO

function of what you think lithium ion can do so if you if you take the kind of prices in China for LFP are probably in that zip code or approaching that zip code if you hold constant that access to the cathode material maybe most importantly we would be similar or better because we there's three types of components in the cell one is those that we share with the lithium-ion industry the cathode has got many of those the foils many of the processing steps the second category is things that we just outright eliminate we don't purchase anode material we don't process it to make anodes etc and then the third category is things that specific to our system which is that ceramic part so much of our pricing the the most expensive component um like in our kind of long-term pricing model is that cathode material if you hold that nickel um the current nickel manganese cobalt type pricing constant so what would the advantage be i thought cost was the long-term it is if you if you holding cathode chemistry constant we'd be cost-advantaged so if you wanted to um it isn't a there are two very different cells but holding cathode chemistry constant so if you do an nmc cell or lfp versus lfp we'd be cost-advantaged

Operator

so like an nmc is like a hundred dollars a kilowatt hour and something like zip code get

Jagdeep Singh, CEO

to 65 and you're similar uh you'd today the uh um so if you uh maybe make that a little more clear you name the our partner would name the cathode chemistry and then our goal would be at scale and at maturity we would beat it relative to lithium ion cells so if they said here's my lithium ion cell that's got nmc our variant we're seeking for both higher performance and lower cost they said here's our lithium ion cell with lfp um we would seek to improve performance and and

Operator

and lower and lower cost i mean how much lower cost on the same type of chemistry i guess i'm

Jagdeep Singh, CEO

trying to gauge um you'd uh we're in some extrapolations um so uh don't it's a tricky you're kind of pulling me out of public public guidance there but um sure and the other thing is like if you think about it our um as a technology licensing company the most compelling thing is providing products that uh don't exist today because of that higher performance you should assume we enter through the high performance luxury parts of the market and that we wouldn't be it would be rare that a customer would be considering us and a lfp cell at the same time just as a comparison the lfp type chemistries are less than half the energy density of the qfc5 it's a completely different product targeted for a completely different part

Operator

of the market i mean when is the ducati is launching and is there a car in any timeline

Jagdeep Singh, CEO

at the at the the Munich auto show the target stated was to commercialize before the end of the decade

Operator

and you said you're working with Volkswagen and that's in a prototype stage on the battery for a

Jagdeep Singh, CEO

car so in that collaboration agreement are a set of kind of milestones and demos the next one up is to do field testing of that Ducati bike okay you did mention data center and

Operator

and yeah obviously a big hot topic and auto names of getting out of auto yeah what what makes your product more or compelling in those areas and what are you what are the functions that those batteries are being used for so this is

Jagdeep Singh, CEO

one of the two high value adjacencies to automotive that we think is particularly exciting. Far earlier days than automotive. Specifically the use case we are focusing on is in-rack power supply in close proximity to the GPUs. That is a tiny market today. The bulk of the energy storage opportunity right now is outside the data center in often a separate building called BESS, battery storage systems, which is predominantly providing a backup type solution. What we're targeting would be interact near the GPUs to help with high quality cost effective delivery of power to the GPUs. So the GPUs consume power erratically in a volatile fashion. We think the most cost effective way to deliver power to the GPUs is to put put in all the infrastructure to deliver the average and allow the battery to do the buffering. You save hundreds of millions of dollars of capex type costs. You reduce the demands on the utility for kind of power supply. But then to do that, the two attributes you'd be very sensitive to. One is volumetric energy density because of the opportunity cost of the real estate. And then the second is safety, just because of the value of all of the assets in a data center it's intuitive you'd want that to be a very safe solution so early days we think that can be a very compelling fit and we are getting a lot

Operator

of inbound interest to explore that so you'd be actually physically in the rack

Jagdeep Singh, CEO

it would be it would be in a in a cabinet dedicated or in the same rack

Operator

okay so it'd be different than the battery storage back apart correct which

Jagdeep Singh, CEO

is traditionally lithium-ion outside in a separate building okay and then the A and D opportunity where do you airspace and defense so anything you put in the air you want it to be light you're often very want you very much want extremes of power for takeoff and if you have humans in it safety so the combination of weight safety and power we think is a great fit with anything airspace related and then defense depending on the application is those same those similar type attributes okay um you know where do you see you

Operator

mentioned I think China being like on LFP is $65 yeah low it I don't think 10 years ago anyway yeah that was possible correct is that the plateau do you think they could even bring that lower I mean are you sort of trying to get your cost

Jagdeep Singh, CEO

it's below a moving target I guess so our it's a great question we're cheering for the industry to continue to make gains across the board in the materials and the processing and the equipment we have overlap with the industry in many of the same steps we share many of the same suppliers so we want gains there where our differentiation comes from is the elimination of the anode so the bill of materials there as well as all the process equipment we also we didn't talk about this secondarily we have a bunch of savings in the formation step so that's the step after cell assembly where often in a process measured in a low number of weeks the cells sit and they form a kind of a protective layer over the anode we don't have anode to form a protective layer over so we can skip that step that's um some of uh i i believe tesla has or panasonic has talked about that's actually the most expensive step in their in their process and we cut that down uh very very substantially because we don't we don't have an anode to do a protective layer against so um uh remind me the the the the original question again so i lost my train of

Operator

thought there was about um uh we're talking about uh the you know oh the current tech long-term

Jagdeep Singh, CEO

cost long-term cost so um so our our goal is to for our separator to be less than the cost of their separator plus the anode that we eliminate and we have we have confidence in in doing that so um our goal is to kind of undercut below um can there i i think there there will be kind of continued cost improvement i would highlight that the rate of energy density improvement in the kind of lithium ion space is very much slowing um we think getting onto a new platform we get to restart the s curve and we have a much more compelling kind of r d kind of road map so our goal is to actually expand uh over time both the performance and the kind of cost savings when at some point

Operator

I mean, it's a floor. I mean, a lot of us, the batteries stopped.

Jagdeep Singh, CEO

Yeah, you can never, a good, one good thought experiment is just like, what's your magic wand price of just the raw materials? You can, of course, never exceed that. And then the goal is just to get closer and closer and closer. There's a lot of smart, hardworking people, and I expect they'll make kind of year-over-year gains getting kind of closer and closer to it. But that's, to your point, it's a pretty efficiently made sell, and they are running out of opportunities to do that. And we would be getting onto a new cost curve that's got a lot of room to run.

Operator

And what does the – who are your main competitors today? What does the landscape look like?

Jagdeep Singh, CEO

That's a good question. So we divide the competitive landscape into two parts, into lithium-ion, which has that architecture that we discussed. that's what's kind of widespread today and then into lithium metal where those are in the very early part of commercialization so on the lithium ion space we talked about all the different advantages that we're targeting and we think there's structural reasons why you outperform on performance and then the long term also outperform on cost within the lithium metal space we do publish a nice slide in the investor deck, which puts onto a single slide what we think are all the core performance at the same time. On the y-axis here is charge time for repeat cycling. On the x-axis is life. The size of the circle here is a kind of nice correlation with energy density. If you have no excess lithium in the system, you have kind of a big circle. If you have excess lithium, you have a small circle and then the color is the the difficulty of the other test conditions red has quite high power or pressure which would I think limit the useful applications you kind of find blue you could probably do with the support of a system like an automotive product you have the support of a system which can help with kind of pressure and temperature and then green we think can work natively. The cell by itself can work at, for example, at room temperature, doesn't need applied pressure to function. To be an automotive product, we believe you need to be on that line of one, which is a one-hour charge, one-hour discharge for long-term repeat cycling, to at least 800 cycles before you lose 20% of capacity. We, of course, we've shown the chemistry can do that with no applied pressure at room temperature. We don't do it with any excess lithium metal. We're the only ones who've ever shown that. In fact, we're far ahead of everyone on multiple dimensions, as you've seen. So we don't, in the fullness of time, it's a huge, hundreds of billions of dollars of TAM, we think, just in automotive alone. You start adding up these other industries, there's room for lots of winners. We don't see anyone who's close to us today. That kind of competitive landscape does keep moving. The other nuance is There's a diversity of materials in there as well, some of which we've worked with and are skeptical may ever work, but that's kind of the competitive landscape today. So we actually focus mainly until we see someone kind of show the chemistry kind of works. A lot of our focus, we look at what are the trends being set by your cattles and BIDs in terms of that inexpensive LFP cell. what are the LG's and Panasonic's doing in terms of that energy density rich kind of nickel cells and then we also kind of have our eye on that I mean what

Operator

if you were investors were meeting with some of your competitors I mean everyone always spins their story positively what do you think are the KPIs that you should be asking about to kind of fairly compare this it's just what's your

Jagdeep Singh, CEO

prototype performance on all the dimensions at the same time because it's easy just to focus on one. It's like, I have energy density of blank. I have fast charge time of blank. But to have a product, it's a multi-part and statement. You need to be small and light and fast charging and long-lived and hit your kind of cost point in time. So it would be, we've tried to be the standard bears just in terms of transparency for showing all these metrics simultaneously and i think this if there was a single if there was a single test we would say just plot yourself on this chart would be a good good one charge because this this has uh this has the uh long-term cycling you're explicit on the rate you're explicit on the temperature and the pressure uh and then you're commenting if you're using excess lithium or not which um would be a a real impediment to bringing out a product, because if you add lithium that you don't need into the system, it's expensive, it hurts your energy density, it probably hurts your life, and it's not needed. So this is probably a nice single, we think this is a very elegant single slide summary, and it also, it's like, what have you demonstrated, not what are you trying to do?

Operator

Any questions, Emma? Maybe one, we've seen, there's some headlines about BYD doing fast charging, some of your advantages are fast charging. What is the difference between what they're doing and what your technology could do?

Jagdeep Singh, CEO

So a good example of, in that case, BYD only talked about the charge speed. So I think it was something like in the five to six minute type ballpark, which is very compelling. The question is, what are the rest of the metrics doing? It's, anything else is just kind of extrapolation. It's probably an LFP cell, which has less than half the energy density of what we're working on. It's almost certainly a lithium ion cell, which has inferior kind of safety. So it is helpful just to disclose the rest of the suite.

Operator

But what is the challenge with their technology? It's just you don't have enough information to do that.

Jagdeep Singh, CEO

It's not public. They published the charge speed in isolation.

Operator

Okay. What about other, you mentioned data center and air on defense.

Jagdeep Singh, CEO

What about, a lot of people talk about drones.

Operator

I think it's like a solid state competition that's almost unique there. Is that a market you're looking at?

Jagdeep Singh, CEO

Yeah, I would put that into the aerospace and defense zip code. So both things that fly in the air and also things that are under the water, I think, are both would value energy density gains, the power, life, safety, actually, as well. In a military-type application, it needs to get to where it's used. And then safety in particular is important in those steps. Many things go via the U.S. Navy, for example, to use a U.S. military example. And you want safety from kind of point A to point B.

Operator

And what about funding? So I think you're burning a bit of cash now. How long? How do we think about the funding pipeline?

Jagdeep Singh, CEO

So at the end of Q on our April earnings call, talking about Q1 results, we had about $900 million of liquidity. so and that is very substantial kind of funding relative to our our cash burn rate we haven't because of the size of the balance sheet a few quarters ago when we started doing customer billings we kind of retired giving kind of cash runway until guidance at the time when we took that out it was into 2030 and we told investors at the time you guys can see the balance sheet you can kind of see the cash burn. We think for the current early commercialization phase that inflows from customers is maybe a more useful metric. So it's very strong. So we're a very well capitalized company and we think that is kind of both a strength and a differentiator for us in the space. Just to put out some other kind of, the other guidance which we reaffirmed on the April earnings call. EBITDA loss between $250 and $270 million is relatively flat year-over-year. $40 to $60 million of CapEx, most of which is for the beyond the QOC5. And we said we were tracking to year-over-year increases in the customer billings.

Operator

Okay, I think we're actually out of time. So thank you very much for joining us. So thanks, everyone.

Jagdeep Singh, CEO

Okay, thank you, everybody.