QuantumScape Q1 2025 Earnings Report

QuantumScape EPS Results

• Actual EPS: -$0.21
• Consensus EPS: -$0.19
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: -$0.24

QuantumScape Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

QuantumScape Announcement Details

• Quarter: Q1 2025
• Date: 4/23/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, April 23, 2025
• Conference Call Time: 5:00PM ET

QuantumScape (NYSE:QS) (NYSE:QS) is a development-stage company specializing in the research and commercialization of solid-state lithium-metal battery technology for electric vehicles. The company’s core mission is to replace conventional lithium-ion batteries with a solid-state design that promises higher energy density, faster charging times and improved safety. By leveraging novel materials and manufacturing techniques, QuantumScape aims to address key performance limitations of existing battery systems and accelerate the adoption of zero-emission transportation.

QuantumScape’s primary product focus is its single-layer solid-state battery cells, which integrate a proprietary ceramic separator to enable the use of a lithium-metal anode. This configuration is engineered to deliver greater energy storage per unit mass, potentially extending driving range for electric vehicles while reducing overall battery weight. The company has also advanced its stack architecture, cell processing methods and quality control processes in pursuit of scalable, cost-effective production suitable for the automotive market.

Founded in 2010 as a spin-out from Stanford University, QuantumScape has attracted strategic partnerships and investments from leading automotive and technology firms. The company’s development headquarters and pilot production facility are located in San Jose, California, with additional research operations in Europe to support collaboration with key manufacturing partners. A notable collaboration with a major global automaker aims to facilitate integration of solid-state cells into next-generation electric vehicle platforms.

At the helm of QuantumScape’s executive team is co-founder and Chief Executive Officer Jagdeep Singh, whose background in energy storage and electronic materials has guided the company’s research roadmap. Under his leadership, QuantumScape has expanded its technical staff to include experts in materials science, electrochemistry and battery manufacturing engineering. The company’s board and advisory network feature seasoned professionals from the automotive, industrial and technology sectors, reinforcing its position as a contender in the evolving electric mobility landscape.

QuantumScape Q1 2025 Earnings Call Transcript

Key Takeaways

• We commenced shipping QSC5 samples for module and systems integration, with our COBRA separator process on track to enter baseline production in Q2 and demonstrate an order-of-magnitude productivity improvement over Raptor.
• QuantumScape reported a Q1 GAAP net loss of $114.4 million and an adjusted EBITDA loss of $64.6 million, reiterating full-year adjusted EBITDA loss guidance of $250 million–$280 million.
• The joint development program with Volkswagen’s PowerCo continues to advance, including passing UN 38.3 safety tests and on-schedule module-level testing ahead of 2026 field trials.
• We announced a framework agreement with Murata Manufacturing to leverage their high-precision ceramics expertise and rapidly scale our COBRA separator production for gigawatt-hour manufacturing.
• Our newly released strategic blueprint emphasizes a global technology licensing model that mitigates trade risks, drives ongoing battery innovation, and builds an ecosystem of equipment, materials, and OEM partners.

Presentation

[Operator]

Good day, and welcome to QuantumScape's First Quarter twenty twenty five Earnings Conference Call. John Sager, QuantumScape's Vice President of Capital Markets, you may begin your conference.

[John Saager, Vice President at QuantumScape]

Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's first quarter twenty twenty five earnings call. To supplement today's discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter. Before we begin, I want to call your attention to the Safe Harbor provision for forward looking statements that is posted on our website as part of our quarterly update. Forward looking statements generally relate to future events, future technology progress or future financial or operating performance.

[John Saager, Vice President at QuantumScape]

Our expectations and beliefs regarding these matters may not materialize. Actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. There are risk factors that may cause actual results to differ materially from the content of our forward looking statement for reasons that we cite in our shareholder letter, Form 10 ks and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape's CEO, Doctor. Siva Sivaram and our CFO, Kevin Hetrick.

[John Saager, Vice President at QuantumScape]

With that, I'd like to turn the call over to Siva.

[Siva Sivaram, President & CEO at QuantumScape]

Thank you, John. I would like to begin by discussing our upcoming product launch. We continue to work closely with our prospective launch customer. As a reminder, this launch program is designed to be a low volume but high visibility project. It is intended to serve as a real world vehicle demonstration, highlighting the exceptional performance characteristics of our technology platform as a step towards large scale commercialization.

[Siva Sivaram, President & CEO at QuantumScape]

The program is planned to unfold over multiple phases with field testing slated to begin in 2026. This quarter, we commenced shipping QSC5 samples for module and systems level integration and testing, including design validation and calibration of the battery management system. This is consistent with our development approach. We focused on getting rapid customer feedback while making systematic and methodical improvements. We are tracking to the shipment targets we have established with our large customer.

[Siva Sivaram, President & CEO at QuantumScape]

These shipments are powered by our Raptor separator process, which is exceeding our key benchmarks for yield and quality. Raptor is our workhorse for both customer shipments and development activities on our technology platform as we progress towards baselining our COBRA process. COBRA is a step change innovation in ceramics processing, which can enable an order of magnitude improvement in separated productivity relative to Raptor. Next, a word on our progress towards our annual goals. Our first key goal for the year is to bring the COBRA separated process into baseline production.

[Siva Sivaram, President & CEO at QuantumScape]

This project is ahead of schedule. All the required separator processing equipment has already been installed and qualification is progressing well. We expect to bring COBRA into the baseline in Q2. Our second goal is to install higher volume cell assembly equipment to match the higher throughput of COBRA. Working as a joint team with on-site power co engineers, we're enhancing the level of equipment automation, allowing us to increase the output and quality of QSC5 samples.

[Siva Sivaram, President & CEO at QuantumScape]

These equipment designs also represent an important piece of the technology platform that PowerCo will use in their large scale production. We have placed purchase orders for key pieces of equipment and will upgrade the baseline continuously as they arrive. Our third goal for 2025 is to begin shipping QSC5 B1 samples and this goal remains on track. These COBRA based samples will go into the launch program, which is intended to demonstrate the exceptional performance capabilities of the QSC5 platform in a real world application. B1 cells are the version that will supply the field testing phase of the launch program in 2026.

[Siva Sivaram, President & CEO at QuantumScape]

Our fourth annual goal is to expand our commercial engagements. On this front, we continue to intensify development activities with PowerCo, the battery manufacturing company of the Volkswagen Group, as we work towards industrializing our technology for gigawatt hour scale production. In Q1, we welcomed top leadership from the Volkswagen Group and PowerCo to personally review the progress made by the joint team. PowerCore is the anchor customer in our growing technology ecosystem. To further expand this ecosystem, we are working with additional automotive OEM customers as mentioned in our last earnings call.

[Siva Sivaram, President & CEO at QuantumScape]

We are also building a global network of equipment vendors, material suppliers, contract manufacturers and technology partners, leveraging the expertise of industry leaders across the value chain. To that end, we have announced the first phase of an agreement to explore a collaboration with Murata Manufacturing for ceramics production. Murata has a deep expertise in high precision ceramics, which makes them an exceptional partner as we look to scale production of our proprietary ceramic separator. By combining our groundbreaking Cobra process with Murata's proven capabilities and global manufacturing strength, we can accelerate the industrialization of our solid state battery technology while maintaining our strong focus on innovation and technological advancement. Last, I want to pull back and look at the big picture.

[Siva Sivaram, President & CEO at QuantumScape]

This quarter, we released our strategic blueprint. This is our playbook for commercializing our next generation battery technology at a global scale and we encourage all shareholders to view it. Here, we'd like to highlight a few important aspects of this blueprint. First, as a technology company, we believe our business model is resilient to changes in global trade regimes. By partnering with customers around the world and licensing our technology for their own production, we can achieve a global impact while limiting our exposure to the risks presented by policy changes.

[Siva Sivaram, President & CEO at QuantumScape]

Second, we will continue to create value by pushing the technology frontier. We have a development roadmap of future innovation in battery technology that builds on our solid state lithium metal platform and these innovations are designed to unlock higher performance, drive wider adoption and increase our value as a company. Finally, we are building an ecosystem of partners to help rapidly bring our technology to the world. Technological revolution can only happen when companies around the world see the opportunity and work together to make it a reality. Our framework agreement with Murata Manufacturing represents another important step in this direction.

[Siva Sivaram, President & CEO at QuantumScape]

When looking at the global perspective, it is clear that the electric powertrain is set to dominate the automotive industry. And automakers are looking to solid state battery technology to remain competitive. We believe our technology edge, when combined with our strong balance sheet and consistent record of execution, sets us apart as a clear leader in solid state batteries and we are well positioned to expand our advantage and generate exceptional shareholder value over the long term. Thank you for your support and we are excited to report on our continued progress over the coming quarter. With that, let me turn things over to Kevin for a word on our financial outlook.

[Kevin Hettrich, CFO at QuantumScape]

Thank you, Siva. Capital expenditures in the first quarter of twenty twenty five were $5,800,000 Q1 CapEx primarily supported facilities and equipment purchases as we prepare for higher volume QSC5B1 sample production using the COBRA separator process. We expect CapEx spend to be well above Q1 twenty twenty five levels through the remainder of 2025 as we order, install, and qualify higher throughput equipment to support our targeted launch program and engage prospective customers. We reiterate our full year guidance for CapEx to be between $45,000,000 and $75,000,000 GAAP operating expenses and GAAP net loss in Q1 were $123,600,000 and $114,400,000 respectively. We forecast EPS to remain roughly flat throughout the year as increased spending to support higher output levels and the impact of current tariff policy we expect to be broadly offset by improvements in operational efficiency, such as the planned transition from our Raptor to our Cobra separator process and cost saving initiatives.

[Kevin Hettrich, CFO at QuantumScape]

Adjusted EBITDA loss was $64,600,000 in Q1, in line with expectations. A table reconciling GAAP net loss and adjusted EBITDA is available in our shareholder letter. We reiterate our full year guidance for adjusted EBITDA loss to be between $250,000,000 and $280,000,000 We ended Q1 with $860,300,000 in liquidity and maintain our guidance that our cash runway extends into the second half of twenty twenty eight. Any additional funds from customer inflows or capital markets activity would further extend this cash runway.

[John Saager, Vice President at QuantumScape]

Thanks, Kevin. We'll begin today's Q and A portion with a few questions we've received from investors or that I believe investors would be interested in. Siva, first question for you. Can you update our investors on our automotive customer engagements during the quarter and explain how that affects our existing customer?

[Siva Sivaram, President & CEO at QuantumScape]

John, let me start with our existing customer. The product launch that we are planning is going very well. The teams are working hand in glove and we are shipping the volumes that the customer needs for module and systems level testing. That means our customer will be packing these cells into larger modules, connecting them electrically into a battery management system, the BMS, and calibrate that BMS according to the specific performance profile of our cells and the requirements of the application. Of course, to ship in these volumes, we have to pass the UN 38.3 safety tests.

[Siva Sivaram, President & CEO at QuantumScape]

We have now passed these tests, which is another important milestone in our commercialization roadmap. This is a well planned launch and we'll have exciting details to share as we progress. Now coming to our additional automotive OEMs. The response from our customers to the licensing business model has been overwhelmingly positive. We continue to be in active discussions with our prospective customers.

[Siva Sivaram, President & CEO at QuantumScape]

We have developed an engagement model with PowerCo as the first customer that allows us to collaborate with our customers to design bespoke solutions that fit their roadmaps. Each relationship is unique and these are long term engagements. And these customers are in our facilities working with us. In stark contrast to public sentiment, our conversations with our customers have a sense of urgency and enthusiasm. The world needs a better battery and our customers see the step change improvement of our technology.

[Siva Sivaram, President & CEO at QuantumScape]

We can offer a no compromise solution that beats internal combustion engines on pure driver experience.

[John Saager, Vice President at QuantumScape]

Thanks, Siva. Today, QS and Murata Manufacturing announced the framework agreement for ceramics production using our COBRA technology. Could you please elaborate on their role in a licensing model and how this fits into our overall strategic blueprint?

[Siva Sivaram, President & CEO at QuantumScape]

Absolutely. Our engagement with partners like Murata is fully aligned with our strategy as a technology licensing company. The vision is to develop our proprietary solid state battery technology platform and then partner with world class manufacturers to bring it to scale efficiently. The first major step in that journey was our agreement with PowerCo, which is targeting 40 to 80 gigawatt hours of production capacity. To give you a sense of scale, even 40 gigawatt hour translates into hundreds of millions of square meters of separator components.

[Siva Sivaram, President & CEO at QuantumScape]

Manufacturing at such high volume and with the necessary quality requires collaboration with highly capable partners. That's where Murata comes in. They are a global leader with decades of experience in high precision ceramics and we are excited about the opportunity to leverage their expertise. By combining our groundbreaking Cobra separated production process With Murata's proven capabilities and global manufacturing strength, we can accelerate the industrialization of our solid state battery technology while maintaining our strong focus on innovation and technological advancement. As we continue to grow, we expect to bring in additional partners across different parts of the supply chain.

[Siva Sivaram, President & CEO at QuantumScape]

Our approach is intentional and modular. We are nurturing a broader ecosystem of collaborators who can help us scale while protecting our IP. This model draws from my experience in semiconductors where disaggregation of the supply chain enabled innovation. Instead of vertical integration, each player focuses on what they do best. Fabulous design companies innovate, foundries manufacture, and everybody wins by operating at scale.

[Siva Sivaram, President & CEO at QuantumScape]

This approach doesn't just support IP creation, it also strengthens IP protection by separating know how across specialized partners with well aligned incentives. We are applying that same logic here.

[John Saager, Vice President at QuantumScape]

Thanks again, Siva. Kevin, turning to you now. You've reaffirmed our guidance in the shareholder letter today. I have two questions for you on that front. First, can you discuss the tariff implications on our financial outlook in the near term?

[John Saager, Vice President at QuantumScape]

And then can you discuss how our supply chain exposure compares to that of conventional lithium ion?

[Kevin Hettrich, CFO at QuantumScape]

On the topic of tariffs, I have three points to make. First, we forecast tariffs in their current form would only have a marginal impact on our cost of materials and equipment. We're actively working to mitigate this by evaluating lower tariff sources and through continuous efforts to reduce costs. We are not changing guidance and we reiterate our adjusted EBITDA loss and CapEx guidance for the year. Second, China has restricted export of certain critical materials to The US.

[Kevin Hettrich, CFO at QuantumScape]

We have not been impacted by these restrictions. I would also highlight that our anode list design eliminates graphite from the cell, a material dominated by China from a supply chain point of view. Our anode list design both removes the cost of the anode as manufactured along with the associated supply chain risk. Third, we are a global technology licensing company. Our success derives from innovation, ecosystem development, and enablement of our licensing partners.

[Kevin Hettrich, CFO at QuantumScape]

We remain focused on meeting the massive worldwide demand for significantly higher performing batteries.

[John Saager, Vice President at QuantumScape]

Okay. Thanks so much. We're now ready to begin the live portion of today's call. Operator, please open up the line for questions.

[Operator]

Thank Your first question comes from Jordan Levy with Truist Securities. Your line is open.

[Jordan Levy, Vice President - Sustainability Equity Research at Truist Securities]

Afternoon all. I appreciate the commentary on the Murata deal here. Maybe just to dive a little bit more in on that. Is the thought that they've kind of stepped in after you've worked out of the commercialization IP and pathway for separator production? Or are they gonna be kind of an integral part of that that kind of trajectory?

[Siva Sivaram, President & CEO at QuantumScape]

Jordan, Murata, as you know, is a world leader in precision ceramic production. They already supply a lot into both the electric vehicle and consumer electronics markets. And they have a global presence in high volume, ceramic manufacturing. So they are a, a well planned partner for us to ramp high volume production. The excitement that they showed when they came here to look at the COBRA technology was one of those things to to behold.

[Siva Sivaram, President & CEO at QuantumScape]

I mean, we were working together, and they see the possibilities of high volume since ceramic production together. So we expect them to be a very integral part of our supply chain as we develop the ecosystem. The QS ecosystem, as it grows up, we they'll they'll be a big part

[John Saager, Vice President at QuantumScape]

of it.

[Kevin Hettrich, CFO at QuantumScape]

The only other thing I could add is that in addition to, the speed and the capital, efficiency with which we partner with Murata, working with partners as part of the broader QS ecosystem adds value to our core technology platform. As more global players invest resources and know how into our ecosystem, the platform becomes more robust and ultimately more valuable.

[Jordan Levy, Vice President - Sustainability Equity Research at Truist Securities]

Super helpful. Appreciate that. And then maybe just a quick follow-up on the on any, incremental IP licensing deals. I recognize there's nothing to announce today, but just to kind of gauge, the conversations you're having. Have you seen any, you know, uptick in, in excitement on on your potential customer base or anything with all the geopolitical, environment and tariffs going on?

[Siva Sivaram, President & CEO at QuantumScape]

Jordan, this is a fairly important issue that we are addressing. In general, ever since we announced that we are a technology licensing company and when we started talking to our customers, there is a real uptick in the urgency with which they want to proceed and the excitement at the technology. Overall, there may be choppy waters in in in in the in the industry, but our interactions are exactly to the contrary. We see them really want to partner with us and develop these long term relationship where we can develop bespoke solutions for their road map needs. And that has been very encouraging to follow.

[Jordan Levy, Vice President - Sustainability Equity Research at Truist Securities]

Thanks so much.

[Operator]

The next question comes from Winnie Dong with Deutsche Bank. Your line is open.

[Winnie Dong, Director, Equity Research at Deutsche Bank]

Thanks for taking my question. First question is on I was wondering if you can provide an update on the work that you guys are doing with PowerCo itself. Last time, I believe you mentioned there's some personnel devoted to the joint effort, both on QS and PowerCo. So I was just wondering if you can provide an update on that. And then my second question is on the initial phase of the agreement with Morada.

[Winnie Dong, Director, Equity Research at Deutsche Bank]

What is included in the first phase? And then for future partnership purposes in subsequent phases, I'm just curious how that partnership will look like. Is it going to be more of a breebery relationship between Murata, you, and, you know, future customers, or are they gonna be essentially, like, a supplier to you guys? Thank you.

[Siva Sivaram, President & CEO at QuantumScape]

Winnie, on the first question, on the PowerCo partnership, if you come by our offices, you'll see whole bunch of Germans walking around in the labs working closely with us. We are increasing the automation and efficiency of the line and integrating COBRA into it. And that integrated line with COBRA is what is going to be used for b one samples that we'll be shipping later. And they are working with us day in and day out in increasing the capability of this line. And that collaboration is going very, very well.

[Siva Sivaram, President & CEO at QuantumScape]

As you saw, we had some of the the highest levels of people from Volkswagen and PowerCo spend time with us. And they are continuing to express their strong support in the joint work that's going on between the two companies. Coming to your question on how partnerships such as Murata are going to evolve over time, each of this is going to be unique. There's not going to be a one size fit all relationship. As we look at ceramic manufacturers, equipment manufacturers, materials manufacturers, and cell manufacturers with our OEM partners, each of them is going to have a relatively specific agreement that we'll be developing to strengthen the entire supply chain so that you can take this truly differentiated battery platform and deliver to the end customers.

[Siva Sivaram, President & CEO at QuantumScape]

And we want to get there as fast as possible in the most efficient way possible. That's why we are developing this QS ecosystem in a in a broad based fashion and looking at partners wherever they are to come and work with us.

[Operator]

Perfect. The next sorry. The next question comes from Mark Delaney with Goldman Sachs. Your line is open.

[Mark Delaney, Analyst at Goldman Sachs]

Yes, good afternoon. Thanks for taking my questions. First one is on the competitive landscape and hoping to get your latest thoughts on where that stands. And given some of the technology progress announced in recent months from some of the LFP companies like BYD and CATL around progress they're making with very fast charging capabilities, so called five minute batteries, has that affected your views of the competitive landscape and what you're seeing from additional perspective automotive customers?

[Siva Sivaram, President & CEO at QuantumScape]

Hey, Mark. Yes. We've been very closely following along with the series of announcements from BYD and cattle on these LFP batteries from China. Now first and foremost, these are giants of companies that have really worked hard to push the envelope on lithium ion conventional lithium ion batteries capabilities. They have pushed it farther and farther.

[Siva Sivaram, President & CEO at QuantumScape]

However, on these unspecific announcements, there's a lot of data that is still lacking, so we don't get full information on it. What we do see, however, is we have a no compromise solution in the QS platform. The QSC five with respect to safety, cycle life, energy density, power, cost, fast charge, range, put them all together. The this is the only no compromise solution out there. And you can see that by the excitement from the large OEM customers who are coming into our shop and working with us.

[Siva Sivaram, President & CEO at QuantumScape]

So we are following these developments from China carefully. We are taking them very seriously, but we are still very confident on our lithium metal anode free. As you can see, there is there's no anode. We don't have to think about having to find graphite or or anything else to put on that side. The best is to have not to have an anode, and and we have that as a solution.

[Siva Sivaram, President & CEO at QuantumScape]

So we feel confident even in light of all these competitive announcements on the strength of our offering.

[Mark Delaney, Analyst at Goldman Sachs]

I appreciate all the thoughts on that. My other question was on the potential collaboration with Murata. And do you think customers that are licensing your technology can cost effectively scale to higher volume production of the separator for series production vehicles if you don't come to an agreement with Murata? Or is this just about making it faster and more efficient than you'd previously been planning? Thanks.

[Siva Sivaram, President & CEO at QuantumScape]

Precisely. The latter. So you can see that we are a technology company first and foremost. We produce a lot of intellectual property. So our first job is to make sure that intellectual property is well protected, and we're able to scale that into a product very quickly.

[Siva Sivaram, President & CEO at QuantumScape]

We continue to develop the core technology. We develop the COBRA process. We develop this highly scalable process. That makes us even more incented to go find partners who are very good, high volume manufacturers in that specific area. That allows us both to combine our skills and get it to market fast.

[Siva Sivaram, President & CEO at QuantumScape]

This is the as you would see, the the the network effect of us having multiple similarly minded, similarly motivated, well aligned partners trying to take this core intellectual property and get into high volume. That is the plan.

[Mark Delaney, Analyst at Goldman Sachs]

Understood. And I guess just one last one before I turn it over. As you're exploring this potential collaboration with Murata, is that something you expect PowerCode to be involved with as well? Or is this just between you and and Murata and anything with with PowerCo would would be separate from that? Thanks.

[Siva Sivaram, President & CEO at QuantumScape]

So this contract, this development arrangement is between QuantumScape and Murata manufacturing. That does not mean we don't keep our OEM partners fully informed of what we are doing, and Oracle is fully supportive of what we are trying to achieve over here. And as you probably have seen in our strategic blueprint, in our global ambition, it is important that we do have these kinds of partners around the world who are working closely with us. And our OEM partners actually are very encouraged that we are putting this global, QS ecosystem together.

[Mark Delaney, Analyst at Goldman Sachs]

Thank you.

[Operator]

Your next question comes from Jed Dorsheimer with William Blair. Your line is open.

[Mark Shooter, Sr. Associate - Energy & Sustainability Equity Research at William Blair]

Hi. You have Mark Schuder on for Jed Dorsheimer. Congrats on the progress and collaboration with Murata. As you think through other collaborations, especially for cell manufacturing, would POWERCO be open to manufacturing for non VW customers? Assuming no, how are you thinking through finding other cell manufacturing supply? And are customers China sensitive?

[Siva Sivaram, President & CEO at QuantumScape]

Mark, we look at this in a fairly systematic fashion. We look at all opportunities. And by the way, I will not speak for Oracle what they would or they would not do. We do look at other large OEMs, auto OEMs who do want to make cells. And we are not ruling out discussions with other cell manufacturers, equipment manufacturers, materials manufacturers, and ceramic manufacturers all across the spectrum.

[Siva Sivaram, President & CEO at QuantumScape]

So this is part of what we'll be looking at for various specific applications.

[Mark Shooter, Sr. Associate - Energy & Sustainability Equity Research at William Blair]

That's very helpful. Thank you. Tesla last night and Elon Musk, he he that the best anode is no anode at all. You know, to me, that sounds like he's referring to an anode that's designed just like quantum scapes. But it was in reference to, you know, supply chain stress and how China dominates the graphite market.

[Mark Shooter, Sr. Associate - Energy & Sustainability Equity Research at William Blair]

Had how has customer conversations developed around that in in the supply chain and tariffs since April 2?

[Siva Sivaram, President & CEO at QuantumScape]

Our architecture has been anode free from the time we have disclosed it outside. Anode free architecture, we have always felt is the right way to build a high performing battery. We have been very careful in making sure that the intellectual property around it is well protected in the way we build it. Not having graphite has always been a strength of ours and and the best way to to to have a part is not to have that at all, not to have the anode at all. Having said that, overall, you saw Kevin's answer earlier with respect to tariffs.

[Siva Sivaram, President & CEO at QuantumScape]

We have marginal impact from tariffs in our current annual operating plan. And our method of developing a platform and working globally where we are not the ones moving material around is the right way for us to develop create shareholder value. We are very careful in making sure that our partners, our manufacturing and OEM partners know that the technology we are developing is not dependent on any one particular, hard to obtain material. For example, the separator is made of earth abundant materials. So in general, we are watching the various policy changes carefully, but I think our edge will continue to be in us developing new innovation and moving the frontier forward and and making sure our partners are coming along with us. Kevin, you wanna add anything to that?

[Kevin Hettrich, CFO at QuantumScape]

No. Just it is it is a view we, resoundingly agree with. The addition of the the anode in a conventional cell, it adds weight and volume. It limits the the power performance, specifically the ability to charge. It's it has expensive materials to buy.

[Kevin Hettrich, CFO at QuantumScape]

You have to transform it. And in today's environment, adds risk to the supply chain. It's one of the major sources of life loss, and it's chock full of flammable materials. Eliminating it is what leads to the no compromise solution that that we're offering that is superior on all of these dimensions at the same time. So we very much agree with the the the viewpoint, and that's that's core to our technology platform.

[Kevin Hettrich, CFO at QuantumScape]

And it's a a platform we are the clear world leaders in.

[Mark Shooter, Sr. Associate - Energy & Sustainability Equity Research at William Blair]

Thank you, guys. If I can sneak one more in here. Steve, I noticed that the language is a bit broader in your strategic blueprints about applications outside of EVs. Are you guys opening up to potential other high value applications outside of EVs? And is anything on the horizon?

[Siva Sivaram, President & CEO at QuantumScape]

As you know, our first focus is on the automotive sector. That is the highest volume sector out there. But we are producing a very high performance battery that is a no compromise battery that that is, useful across all fronts. So applications such as the rapid growth in data centers, evolving aviation applications, these are all and and consumer electronics. These are all very important.

[Siva Sivaram, President & CEO at QuantumScape]

But as a company, we are focused today on automotive, but keeping our eyes open on these new applications.

[Mark Shooter, Sr. Associate - Energy & Sustainability Equity Research at William Blair]

Thank you.

[Operator]

The next question comes from Joe Spak of UBS. Your line is open.

[Joseph Spak, Managing Director at UBS Group]

Thanks. Good afternoon. I wanted to circle back to Mark's question a little bit on the sort of competitive environment and really sort of better understand what's going on in your C level sort of discussions. Because you know, to his point, and then, you know, as Usur alluded to, there's a a lot of fast moving progression going on with those two players in terms of density, fast charging, sodium ion, you name it, a lot of which have the same or similar benefits to what you can offer. So guess what I'm trying to understand is, is this giving them any more pause in terms of sort of trying to sign up for a certain technology until they see how some of these other developments play out?

[Joseph Spak, Managing Director at UBS Group]

Or or they they you you know, has there been any change in the tone of those conversations?

[Siva Sivaram, President & CEO at QuantumScape]

Yeah. So number one, the fact that the two Chinese players are intensely competitive with each other is a good thing for the industry, and that's always good. However, if you listen to the whole thing carefully, no one is promising any new fundamental technology, not is there a mention of a true solid state battery. Both of them have explicitly stated for the long term that solid state batteries are the future. In this current case, they are taking LFP batteries and working everything around it so that they can enhance the life, enhance the performance of an existing generation of technology, which is a very good thing to do.

[Siva Sivaram, President & CEO at QuantumScape]

However, we are a different paradigm. We start at a different part in the s curve. Our job is to make sure we continue to push the frontier on the solid state battery, which is what makes us feel all the more convicted in our beliefs that we need to be there as soon as possible in high volume because we have a solution that the industry needs to replace internal combustion engines.

[Joseph Spak, Managing Director at UBS Group]

Maybe you could help me understand then why, you know, I guess, the, like, the end justify the means. Like, if if you if you if you get the performance you need or want out of their evolving, you know, technology, then why why would like, even if even if there is a solid state solution, what what what becomes the advantage to move to that versus if the performance and costs are are similar?

[Siva Sivaram, President & CEO at QuantumScape]

Yeah. If you notice, when these data are announced, they don't give you all of the information about those solutions. They don't talk about the safety. They don't talk about the safety of putting a megawatt of power into a cell at any given time, which contains a combustible medium. They do not talk to you when they do cycle, high, fast charging what the cycle life is.

[Siva Sivaram, President & CEO at QuantumScape]

They don't tell tell you how large those packs have to be to get that kind of a range. This is the trouble with making conclusions out of incomplete datasets. We can always make one of something that looks very, very good. What we are promising you and what we are building our company on is what I keep going back to, and no compromise on all of those and first and foremost on safety. We need to be able to make sure we give you a battery that is very safe and performs at the end of its life and cycle life as well as it did on the first cycle even while I'm charging it very fast, even while I give you the range, and even while I'm giving you cost at scale.

[Siva Sivaram, President & CEO at QuantumScape]

And I think the reason all of our customers keep coming back to us is because none of these answers that they hear is satisfactory to them.

[Joseph Spak, Managing Director at UBS Group]

Fair enough. I I guess another one, just going back to the the Yong comment from the other night. It's I think the first time you sort of mentioned anode list, you know, or Tesla has sort of mentioned maybe since, know, I think they filed a patent back in maybe 2020 or something. Like, do you do you have any understanding of what it is they are trying to accomplish, how similar or different it might be from from your solution?

[Siva Sivaram, President & CEO at QuantumScape]

Look, we don't talk about our potential customers, our existing customers. It is for them to talk. We have been talking about ourselves and what a anode free architecture is going to be for a long time. We have not been shy about talking about it in public. So it is good to see more people coming around to our way of thinking, and I I wanna leave it at that.

[Joseph Spak, Managing Director at UBS Group]

Okay. Last one. Do you have any updated thoughts on the timing for when you might be able to provide the street with a little bit more context on some of the financial implications from the licensing model?

[Siva Sivaram, President & CEO at QuantumScape]

Kevin, you wanna take that and

[Kevin Hettrich, CFO at QuantumScape]

We've given the general framework that's long term under the licensing model. You have royalty from the from the sale of product that involves our technology. And then in advance, the other part of the model would be cash flows before that would take one of the following forms or multiple of the following forms, things like prepays, things like reimbursement for development tailored to that product or NRE type type revenue. But we we haven't gone into specifics beyond that framework.

[Siva Sivaram, President & CEO at QuantumScape]

So to round that off

[Joseph Spak, Managing Director at UBS Group]

Okay.

[Siva Sivaram, President & CEO at QuantumScape]

We'll do expect that a licensing business model to have multiple different streams of revenue. And the ecosystem is an important part of making sure these revenue streams are well rounded. And at the appropriate time, we'll come and give you a full financial picture on this.

[Joseph Spak, Managing Director at UBS Group]

Thank you very much, guys.

[Operator]

Once again, if you have a question, it is star one on your telephone keypad. There are no further questions at this time. I'll turn the call to QuantumScape management for closing remarks.

[Siva Sivaram, President & CEO at QuantumScape]

Thank you, operator. With that, I would like to thank our employees for their dedication, our partners for their trust, and our shareholders for their continued support. We look forward to updating you on further progress in the months to come. Thank you.

[Operator]

This concludes today's conference call. Thank you for joining. You may now disconnect.

Participants

Executives

• John Saager, Vice President
• Siva Sivaram, President & CEO
• Kevin Hettrich, CFO

Analysts

• Jordan Levy, Vice President - Sustainability Equity Research at Truist Securities
• Winnie Dong, Director, Equity Research at Deutsche Bank
• Mark Delaney, Analyst at Goldman Sachs
• Mark Shooter, Sr. Associate - Energy & Sustainability Equity Research at William Blair
• Joseph Spak, Managing Director at UBS Group