QuantumScape (QS) 23 Oct 242024 Q3 Earnings call transcript

Good day, and welcome to QuantumScape's Third Quarter 2024 Earnings Conference Call. John Saager, QuantumScape's Vice President of Capital Markets and FP&A, you may begin your conference.

Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's Third Quarter 2024 Earnings Call. To supplement today's discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter.

our want for your posted forward-looking website part I safe to on begin, as provision harbor statements of we to attention call the our Before update. quarterly that is

financial relate generally future or future Forward-looking or statements performance. to operating technology events, progress, future

that and uncertainties materially and actual these factors that are actual to differ results could those expectations are projected. subject risk not materialize. matters cause cause Our periods may to from There beliefs Actual regarding financial may risks cite and results results in from difficulty uncertainties materially and the content for the including of statement the to differ shareholder predicting XX-K our future reasons in Form filings, by forward-looking that letter, outcomes. SEC we other posed our

will our QuantumScape's Sivaram; to I'd be With that, Siva. Siva Dr. CFO, to Hettrich. today turn call and like CEO, Joining the over Kevin us

company's in I'd Thank significant most you, begin achievement the John. by history. discussing like our to

capable the of new produced charging safety. This knowledge, with discharge is efforts. battery development delivering the low ever whole. over testing. These fast that an XXXX, performance to to We respect our first energy and milestone samples are for automotive of liter, with stage our are anode-free speed, of cells and from report rigorous QSE-X, performance cell and energy the begun charging cells, to we power, for goal first for excited begun simultaneously have industry production we shipping volumes as a low-temperature our important cell customer This B-sample of and these of important capable accomplishing of best most company marks XX next-generation just our automotive producing milestone a minutes. B XXX These QSE-X hours applications. cells XX% per product, in density XX% watt density, are measured solid-state QuantumScape's exceptional of for represents to design have first lithium-metal

we our and to have set, design get refine we performance established a profile samples product process, and processes. will continue is baseline and ship the that Now feedback customer

iterations phase, many subject B-sample to product be this these take complete. will testing, of will months samples extensive During to which

We such cell equipment as on others. productivity and substantially to among have reliability, improve metrics yield

our share production. to an like separator update on I'd progress on Next,

implementation in fast is Raptor. annual and key because Raptor And treatment time, separator disruptively set is of from a first The as film our Raptor process performance, and is of named QX, baseline. improvement heat quality our last-generation a production technology as consumption. now our major this We energy goal

will output Raptor our into sample continue support We to QSE-X expect XXXX. that

learning our samples, enabling Raptor step pathway as continue Beyond to we our serves process, best see a B to scale hour as separator production. gigawatt platform Cobra to and transitional which

for preparing are Cobra our in production baseline XXXX. to We enter

end of will Cobra a increase And addition of the volume the place heat this with in expect downstream treatment by higher production. in We will automated enable significant separator equipment, be equipment XXXX. line

like Next, the update PowerCo, manufacturer our with work of joint I'd briefly the Group. Volkswagen on to battery

the gigawatt signed technology PowerCo at scale. into landmark hour bring to have with we our reminder, mass QSE-X a As platform a production agreement

joint in personnel Jose The phase, cells kicked phase mass this $XXX a San in intensive our progress this will industrialization with facilities. activities collaboration to QSE-X exchange payments, off of PowerCo license to produce million contributing QuantumScape the first development grant PowerCo a The battery the technical with prepayment. in royalty Upon phase including skilled at of satisfactory collaboration platform. for QX agreement includes aid

proud moment as is reduction context. to I our in quarter's and up combine team. a of phase supply of this want areas the automation. Last, contribute well-positioned manufacturing equipment this battery in chain, with the platform QSE-X for deep we technology entire such achievements solid-state high-volume knowledge scaling PowerCo PowerCo's put expertise project, During in This processes. QuantumScape and is to

We accomplished important goal. our have most

solid-state those long-term and rates believe it with same we our technology over lower. these cell and the are towards a PowerCo a industry. This We we potential of is with including lithium-metal with to of offer order enhanced customer A to have this million the demanding, partners, further or start what months of forward per no take your performance. balanced samples of safety, no the cells product announced began of time, scale. With and sustained than the shipping Volkswagen industrialization. to vehicle much powerful drivers massive I'll on a for early is can such you of, believe all the goals cells have updating QSE-X been achievement But same you on capable waiting of in It for them B support, the manufacturing To the that, require continued will processes, is to We charging revolutionizing testing. climb the the the look moment and faster represent a we've time. Thank year few we which range, need at mind, we make per millions the for deep longer battery It samples. the of effort new capable Kevin. electric an better than at collaboration kind Group cells to achieve first come. With hand first progress acceleration we is a anode-free defectivity QSE-X things electric in of and view low-volume will high true on for, producing today. started transportation, battery believe shipment the B water world shareholders a mark more should less make impact

in expenses and line higher QX Adjusted prototype and QSE-X QSE-X with in and primarily were Cobra production, supported with EBITDA in million, third net purchases prototype equipment $XX.X volume for expectations. million you, well $XX.X expenditures Capital expectations. quarter million, GAAP we Siva. as low-volume line $XXX.X in production QX other million operating prepare loss was $XXX.X were the as as the for XXXX. GAAP CapEx equipment and in Thank respectively. loss process

We year continue full for loss. guidance track adjusted EBITDA to to

quarter, within of at year not original million, guidance in in settlement for million expect to This the and higher accruals do but reoccur due original XXXX and end our tightened we $XXX primarily to range, to EBITDA we that loss guidance be fees XXXX. $XXX full adjusted legal higher between the

are liquidity. payments driven QX our and late non-deal guidance in to savings, We deal-related $XX lower XXXX million efficiencies, and lowering for realized capital in into planned This expenditures is XXXX. We million. PowerCo shift for million in with related be a certain originally $XXX $XX XXXX ended between guidance by

raised, long-term offers under to a a VW cash prospectus We Any to runway continue market to deal PowerCo capital-efficient extend with previously, are including project our cash extend As our function would and supplement commercialization pathway. ATM mentioned additional path runway. this we capital requirements have XXXX. of further our believe our into funds our

investors investors questions Thanks, Kevin. received I a in. with from be Q&A or We'll that believe few we've begin interested would today's portion

elaborate Siva, QuantumScape qualification the automotive entering cycle? of of can you on phase significance the B-sample the

at consumers' today's lithium-ion is better profile in provide specifications power to a have develop. hear day demand, that lower our performance touting we hard operate and our battery discussing Thanks, isolated high concurrently the that features. of ability cells. We temperatures, the the planned than to manufacturers cell John. We Today, range different specific improvements, from first believe product at ability so performance every announcements better are to worked faster extensive we charging, QSE-X major measurements safety

vehicles the For their battery meet our the are deploy marketplace the actual and first all these believe at of combination customers measurement offering of all vehicle seeing above will no electric OEM time, combustion alternative by you're vehicles. we transform into batteries for compromise to a we internal this a can When of providing characteristics requirements, data that features. scale,

industrialization. QuantumScape's what milestone key is challenges remain a So towards prototype beginning But low-volume journey QSE-X production major on ahead?

just thoughtful, our here we a stage. pleased progressing I'm prototypes reached year. have so results first, XXXX, samples earlier and X-layer with XXXX We this towards deliberate in John, our in of A milestones, through this Alpha-X set single-layer first that and got starting

We the every of you way. step have to communicated

follows our many well-developed that's before. have this Now that's a a have design for that playbook that and we running product, industries a industrialization first frozen process baseline used

San excited to ultimately developed what in with We hour times customer processes, In are methodically, in that that require in to will Jose systematically, in deployed our cells production. do product a ecosystem scale and achieve been fact, career. of several headquarters I'm quality, have need need a collaboration bring gigawatt at production This know my to into familiar have of we We millions very be vehicles. goal I focus take close place our broader on long-term we that feedback, do. constant iteratively, that to during and

you XXXX elaborate to what is Thanks, to you. that? extension? behind Siva. the turning runway on details Can further achieve Kevin, the required

are our will CapEx JV the of equivalent capital more capital the replaces XXXX required $XXX First, earmarked four our primary of extension under drivers: which production million we improvement invest in for for $X.X The structure, previously scale There to PowerCo availability agreement, non-dilutive frees deal prior is runway facilities. hour The than gigawatt billion up forecast. required licensing investments.

personnel contribute the technology of cost helps part PowerCo platform. will Second, skilled resources as reduce which to and our collaboration, industrialize

upon XX of to a capital Third, of license royalty operations, to the Xx prepay term, VW letter, as shareholder by the make we deal of for forecast hours, we've PowerCo in the efficiency already inflow progress. Fourth $XXX dollars. and to of our the features improvements million to satisfactory requirements QuantumScape our JV the realize. Longer begun gigawatt QuantumScape to deal, an from agreement, shift to with reduces replaced, to contingent up billions PowerCo separate which, the the licensing mentioned agreement continue PowerCo size technical

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

[Operator first Joseph with the comes Spak UBS. line of Instructions] from question Our

for on Gabriel is This Joe.

that XX% shipments you that beginning previously time hours per like to I mentioned Raptor. know were Firstly, congratulations XXX on minutes. liter, something XX B-sample XX% targeting fully and you and under watt charge implementing

fleets intending metrics seen from stacks there. Siva, some full decade about So know event. tech of your also announcements time QSE-X 'XX, 'XX within some good competitors frame? see that But I a landscape. we've as we've to volume competitive and to those heard later with solid-state launch how you lower earlier their spoke solid-state introduction for around the expectations of up

lower this volume? do at for in reasonable time EV without you general of setting specific technology frame as see that expectations implementing the So to even begin kind space

ourselves asking will for Gabe, question. talk thanks for the first. I

make focus As the sure knows I focus supply iterative and systematic, this sure on chain, take all how a into B-sample quality. development product partner on announcements a believe We in right, there and We we our volume. do requires This a production. who We with the from ecosystem said, build we high-volume of of make everywhere. time we are shortcuts. from that in methodical, to lot no

focus. I that we production only path and as effort of to All time, can tell this the fastest require does possible. are on you

Our both possible and we partner a is part the first this are delivers path-breaking manner, production these, baseline headed. And is are that's us established to what of we get and fastest technology the highly establishing all actually getting where today. started that which have that of in into motivated

we with ability low to operate have the We our give We good systematically and give all That's methodically, the have very, density, can good them work all energy very about and safety. at you can concurrently, we you. iteratively very established Put that and power, better-than-expected temperatures. tell very together, can customers. you baseline you I safety

is customer this. on us with working closely Our very

$XX to hear. midpoint. That's And million the Great. guide about you at the good lowered CapEx Kevin,

won't implies guide forward? sort such incur CapEx we $XX.X XQ. you expect year to Or rate going costs of some Is full are the million be forward? So repeat quarterly Cobra this expecting as run should the there about that going in spend of

good a that's -- great That's a question.

$XX here to lowered reasons. on $XX CapEx, to three million we question million the for Specifically to guidance

deal-related was PowerCo deal. first regarding efficiencies The VW the

as was second payment would CapEx, at compare going XXXX. non-deal related third OpEx slightly the slightly a of same of we be for XXXX savings, same XXXX reasons, flat certain That of down in timing you The end the the levels to set should targeted flat to And forward levels. down. range actually, well, to of expect thing the XXXX to expect when compared to was into and XXXX you shift when XXXX,

Jordan of our Securities. line with And next from Truist question comes the Levy

on Henry for here. Jordan on B-sample milestones. It's Congrats the

been are now I'm running any and learnings continuously key Just with the produced Raptor higher have from next samples incorporated those running. starting line have to found the guys are year. you curious, start with, there into just that continuous being volume

come improve we better. of Running is absolutely. learn improve baseline, what doing. how on but make Henry, can you're over minus do mean, performance. enough safety XX would of I effect. line, is stable watt to XXX stability the to we is we systematically a also an you on What operating not that is allows asking the rest it the liter, that and run only charge can line from per The and XX see the tell what samples to that per with this hours continuously Even you Cobra baseline degrees a XXX-degree XX expect. are capability, platform exactly to and to the process even thermal which you the kind produces Raptor with XXX kilogram, C of hours the minutes baseline. And on you structure, improvement running a stable at time, just good, comes watt up is

you able on follow-up. quick the mentioned in shift from talk one the next? certain to And What payments drove readjusted guys this to of behind kind then CapEx was that? forecast, that are just year you maybe what to Kevin,

Yes.

a of on progress. customer our It prospective change in Just PowerCo and single-digit any we're transfer work. that, industrialization launch with very milestones the doesn't aligned tech And shift of that to much VW stated the put was for kind the magnitude both publicly millions. and of

course put of in I So normal would it the just operations.

And your with Winnie Bank. Deutsche from the line next comes of question Dong

delivery. on the the starting and of news Congrats B-sample quarter

could you at Is the there some share that B-sample Now QuantumScape understand you offer any testing for there you beyond maybe payment? you deliveries with few economics point? collaboration I that some can customers? And details solving talk maybe economics the can you guys internally this a royalty solving versus months for share any and issues of is around specific that what beyond they're the guys of details for then of be was the potentially secondly, with million PowerCo, I if that might that sort discussed. prepayment wondering $XXX have about

economics? why Winnie, to want talk the take the don't do you question about second we first. Kevin,

No, unfortunately, both share. the as is sufficient which noted, technical royalty And future with in going, details either not correctly we there in outperformance negotiations. anything of put prepay, million to then rate, is two are royalty There's companies one parts. there you beyond the up once inflow QuantumScape. then shared, those and not so an as between there place unlocked industry, disadvantage and as aren't a two And common redacted to is a in progress contracts gets $XXX

reasons, Clearly, So and ability Winnie, parties when negotiate we the other on as the question. for on your disclose, as confidentiality we question, want to much second customers with because can but first start. the to we both have for we retain between many to

as the question What involved, supply in and those with industrialization role the chain that hour at. want and PowerCo's volume take that capabilities, and of we the these So gigawatt place, manufacturing the things in is we want is to the to factory are to development soon parameters. ecosystem, ramp-up And their sure the in as is battery to your one negotiated get B the working out in technology PowerCo we tools sure this sequences are making knowledge possible. capabilities good put scaling production is the very very itself. a uptimes what The as electrochemistry materials into team, deep that samples large-scale factories place, very, good both numbers in at both to processing very we goal these and scale one they up properly involved, in together as making first come out. On Volkswagen's or a put is, don't solid-state of

comes Baird. of with from question Ben Kallo next the your line And

you. I echo guys, everyone's to Congrats congrats

little started, bit and talk that a adding to to there Cobra, more you Cobra it about some more ramp or gets expect timing of could meet the production? should high-volume just we moving and the how how up Just then

Thanks, Ben.

year, Cobra. the next get the process cutting just into, part are is main rightly part we continuous will Raptor from of downstream of pieces be us of individual By be equipment, of end important you added. production need over all year. in that started the certain main Cobra will the developing to be out, Cobra for over pieces Cobra we tools earlier And as majority As expect XXXX. will Cobra production already from place. for as in very that capable slowly Raptor volume point into in, ramp into arriving. this and Cobra. will of will Raptor, a we production a high-volume Early year, cut process tools this the the sample are the in And it step to comes The

touched far? then sending know but potential have just could I or deal expect sample, early hand, I actually patterns you at And it's little on it early it's might if And samples all? to bit, ask too to just that does customers, I tell think their how out. so -- feedback having samples how customers B from But again, change or change in this a if the with you any in customer

in to. us, of samples to to customer, is data share and allow for a very us are our and hand expect, unless proprietary as all having great to us thing that be going of any to Clearly, not customer outside they customers. the you going our would the And choose they is

are, how are. at of power, and measured, those data, of exactly it do thoroughly we so given one sister all the parameter a today presented data from are you we energy, how can that's characterized and just we time. what do measure dimensions have showing that However, you all actually not measure data And cells. how you and data comprehensive the where are We're cells, sister it we the just we showing bits that is the pieces see

the will able That share in Customers it specific and us way we So feedback. that help the own detail. us to the better. with will, making will course, of is will measure own and process reason this their much data give their specifications refining in are

Blair. comes Jed [Operator William Our line of Dorsheimer the next with Instructions] question from

congrats everybody a look You have Mark but undermine That's going Echoing the Shooter to Not else on obviously, that achievement, accomplishment. stage forward on Jed. we're to for B-sample big gate. bit. a

for I correctly as talking the rubber to is thinking will the we're samples. licensing manufacturing and scaling in process? type this needed create Cobra road structure about lot you that? equipment new does responsibility process. wait-and-see shared this build CapEx Because that C meets also for approach see advantage have type any the That's of new development maybe, about So taken, PowerCo they a And Am where right? a responsibility. help the the now that the Do the Cobra shared of derisk have that

general a by is make prepay this royalty it done capital-light same went We model basis, commits certain our your PowerCo qualified cells. samples, they get model. build, a is capital B-sample are to of well to we question and them thing consideration on important And outperformance them the been and ramp earlier. made. On customer. we we when that is we depending relationship be royalties when are to why in were when the respect C In from use all equipment progress whether or an designation where B-sample we're as participate The after. able with run they're very very this the a enabling volumes, will factories. going in PowerCo actually the Volkswagen functionality, with with money the continuing on spending has We important fully the that developed how get the about B-sample, we'll the call with it in that the and talking produce to B the most and they under is and have samples and to their this, Mark, qualification. But

We and doing. partner are in spend what a committing our be building not That's of to will lot factories. capital running

in B C will samples be samples, to their their designation And high cetera, so et ramp ability to from based going volumes. on

our is for the if QuantumScape, from amplifying And the chemistry the industrialization, automation, the industrialization, co-owned driver cell deal, in of But future. the shareholder all major the is separator regardless IP Mark, marketplace. in QuantumScape factory, back shareholder for and to question, perspective, the from by just letter, as always around and the the partner's to in and once as runway. step the core giga-scale The a the PowerCo, a for and And benefits think others this Siva to a it's we your who has a then and the owned development. before the knowledge tremendous in technology discussed extend nonexclusive to get QuantumScape mentioned, terms process over it creates capital design scale. We serves and I competency comments you in each VW take expertise to is it. of the as template you our the into penetrate summer, automotive mentioned And we're

are we for shareholder is watching to maximize So model us the and returns. for shareholder the this returns, optimum

great. That's

thinking OEMs. follow-up -- with create Just I secrets for is then am on other they C-sample, you're that process, this know about is still scale-up that? of If a the QuantumScape And the processes or around XXX% I can trade -- if quick ownership Cobra that. has even working PowerCo responsible correctly pass

potential to you competitors that learning to work? So transfer relationship does PowerCo? how Like immediately that can

who it regardless So in this yes, on of collaboration the ownership the ownership separator pertains of question QuantumScape is, technology phase. creates

contract Regarding use quite are QuantumScape itself. I it for the think with partners. others, and how details into exact on to There balance, favorable with the weeds works of they're other we limitations, the use don't of get but want to

But will customers whom rapidly that we'll have clearly, as possible. is with we expectation multiple as be ramping Mark, our

that. to is do some but to faster way able contract do Clearly, much be will so features us a to this restrictions, for allows And there the be certain it.

time. at call QuantumScape Management, over the I further to no questions are back there And turn this you.

operator. you, Thank

will like critical growth commercial years the behind be is to of of almost As to final would QuantumScape, leading the retiring of shipping Jagdeep at our service. XXXX I our the Singh, up XX end Jagdeep from product. Board note visionary achievement Co-Founder samples today, a after of of first B acknowledge who the and the Chairman,

deeply are and his leading towards gratitude the as my the guidance, We continue Jagdeep be will to continuing striving a I'd a company. On the like personal grateful for express inspired for ambitious has to he for goals friend level, the and to set great his next for extraordinary and into in task take and they further listening, months health to of stage. With you this you on updating invaluable confidante, come. for to company look its thank we on progress forward that,

This call. concludes conference today's

may You disconnect. now