Cool. Why don't I just kick it off? Happy to kick off the next session with QuantumScape. We have today the CFO, Kevin Hettrich. Obviously, leader in solid-state batteries. I think you're going to kick it off with a short presentation. Is that what you said?
Just a few minute overview of the company. Colin, first of all, thank you for inviting us to the conference. It's our pleasure. 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. In a lithium-ion battery, you have an anode, and 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 a solid-state lithium-metal. It's called lithium metal because when in the charged 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. Then the elegant thing is you get all those benefits by not making something.
All of the bill of materials that goes into the anode, all the transformation costs that go into the anode go away. 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. We've developed a very thin ceramic layer that enables that system to work, and that's really the core IP. 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 get into the rest of the conversation.
Sure. Maybe just to kick it off, was it founded in 2010?
That's right.
You had the Volkswagen partnership in 2012.
That's right.
Obviously a ton of excitement then. I think you had prototypes ready by 2020. Where do you stand in sort of the launch-
Yeah
-timeline? I think it's taken a little bit longer than expected.
Yep. 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. The first five years or so were trying to answer the question, does the 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 working. Solid-state lithium-metal and was very promising. They also announced our relationship publicly for the first time. In 2020, as you mentioned, the prototype maturity at that time were larger single areas. The remaining work to do at that time was to make multilayer devices and to continue to work on the maturity of the cells as well as on how they're made.
We moved into automotive A-sample stage, in that kind of 2022, 2023 type timeframe. 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 multilayer 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. We demonstrated the continuous processing. We made a 8x improvement in that processing. We like to use very fast animal names to describe our separator process. The first one was Raptor. 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. We were then 200x 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 QSC- 5. Published specs 844 Wh per liter, just over 300 Wh per kilogram. Charges between 10% and 80% in just over 12 minutes. 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 cascading safety event because of the reasons that I mentioned earlier. That was the first product announcement in 2024.
We had the global debut of a vehicle demonstration at the Munich Auto Show last September, where we powered a solid-state V21L race bike across the stage. A pretty emotional moment, having started 15 years ago, does the material 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. We just inaugurated a highly automated pilot line just this February, called the Eagle Line. That sets us up 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 development specific to them, to sample prototypes, do demonstrations like the one that you see with Ducati. That's near-term validation. It's cash into the company. Then we're working to set up that longer-term licensing model. I'll stop talking and let you ask some more questions, Colin. Sorry.
You mentioned PowerCo. Is that the Volkswagen battery?
Holy on Battery Group. We've been working with Volkswagen since 2012. They've invested in multiple private rounds as the company, more than $300 million of investment. We've struck a collaboration licensing agreement, first in 2024, 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 milestones scheduled in the contract. Investors started getting insight into that, again, with that first payment in Q3 of last year of roughly $10 million. Cumulatively, in the last three quarters across all kind of customers and partners, we've done about $30 million. That's the collaboration partner part of it. There's a team from VW PowerCo. They're a wholly owned battery business on-site in San Jose right now, I guess.
Maybe a little early for them. Arriving soon to work shoulder to shoulder with our team on that pilot line. On the right side of the chart, the licensing side, by far the larger economic opportunity. They have a license, once triggered, of up to 85 GWh, 5 GWh of which can be used for non-automotive applications if they choose. There's a royalty structure there in place. 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 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.
At the stage before that is 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. That's the automotive side of the story there.
The thing you mentioned, the Eagle Line, is that-
Yeah
-that is with PowerCo or is that your own line?
It is our own line and we're working shoulder to shoulder with PowerCo.
PowerCo will be making the batteries for the Ducati at another factory or?
For the Ducati that we demonstrated, you can think of the teams working together to stand up the line, to operate the line, et cetera. Those parts went ultimately into the Ducati, and there's additional work that the teams are working on after that. One of the next goals is to field test that Ducati, which is something that the teams are both working on. Our business model is to- well, 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 other automotive partnerships, including those other top three global OEMs. There are people earlier in the funnel, too.
Just because I mentioned one of the four goals, the other three would be to expand into other high-value markets where we think 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 you'd like. 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, 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, keep coming down the cost curve, to do that type of prototyping and sampling with customers within 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. 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. Then the fourth and final goal is to move beyond the QSE-5. We are a technology licensing company. Our first product, the QSE-5, 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 QSE-5 is about a 5 amp hour cell. Of course, making those parts larger, as some OEMs have requested, is one vector. If you read our K's and Q's, 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. Stay tuned on that over the rest of the year.
Can we just maybe start with, take a step back, just to broadly, what is the opportunity going solid-state or solid metal-
Yeah. Solid-state lithium metal.
-lithium metal.
By eliminating the anode, as I mentioned, you save weight and volume. That, I think people intuitively get, if you're designing a product that might open up products that you can't have, if you Maybe I'll keep the example of automotive going. You can either shrink the battery pack, or alternatively, you can put in a whole bunch more range into the vehicle that you otherwise 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 energy density constant, getting into that 12-minute type zone. You're starting to get into the zip code of the experience that you'd have on a road trip, 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, we want safe cells and systems. By removing the organic material from the anode, as well as substituting today's plastic-like separator that's got membranes in it with a ceramic part, we think those are both steps towards safety. 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.
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. At scale and at maturity, because we have the bill of materials for our ceramic as an earth abundant material found in all the continents, but with multiple different suppliers. Our method of making, we're really leaning into its efficient manufacture 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'll be a pretty big sea change moment.
Where do you see current LFP today in terms of cost, and where you're aiming to get your technology to go?
Good question. Maybe a global price is in the zip code of $80, and within China would be lower. The bulk, if you look at other chemistries' costs of 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 cathode, so we're trying to push the limits of performance. We have shown data with our solid-state separator or lithium-metal anode paired with an LFP cathode, just to remind investors that that is a platform. In that collaboration phase, 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 would be in the standard type of customization that we would do. If a customer's optimizing for cost, you could go towards one of those less expensive options. If they wanted to push towards energy, which most of them do in our conversations, you'd end up in that nickel-rich type camp. As I mentioned, the goal is with maturity and with scale, would be to offer both higher performance and a lower cost solution.
Any color on, can you get to $60 a kilowatt hour? Is there any public targets there?
It's a function of what you think lithium-ion can do. If you take the 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. 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, et cetera. The third category is things that are specific to our system, which is that ceramic part.
Much of our pricing, the most expensive component, like in our kind of long-term pricing model, is that cathode material, if you hold that nickel, the current nickel manganese cobalt type pricing constant.
What would the advantage be? I thought cost was the long-term opportunity.
It is. Holding cathode chemistry constant, we'd be cost advantage. If you wanted to, they're two very different cells, but holding cathode chemistry constant, if you do an NMC cell or LFP versus LFP, we'd be cost advantage.
Like an NMC is like $100 a kilowatt hour and- [crosstalk] you think you get to $65 and you're similar [crosstalk] ?
Maybe make that a little more clear. 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. 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. If they said, "Here's our lithium-ion cell with LFP," we would seek to improve performance and lower cost.
How much lower cost on the same type of chemistry? I guess I'm trying to gauge.
We're in some extrapolations. It's tricky, you're kind of pulling me out of public-
Okay
-public guidance there.
I guess. Sure.
The other thing is like, if you think about it, as a technology licensing company, the most compelling thing is providing products that 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 it would be rare that a customer would be considering us and an LFP cell at the same time. Just as a comparison, the LFP type chemistries are less than half the energy density of the QSE-5. It's a completely different product targeted for a completely different part of the market.
When is the Ducati launching, and is there a car, any timeline of when maybe see an EV of that type?
At the Munich Auto Show, the target stated was to commercialize before the end of the decade.
You said you're working with Volkswagen, and that's in a prototype stage on the battery for a car? Is that where you're going?
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 A&D-
Yeah
-which obviously has been a big hot topic in auto-
Yeah
-type names of getting out of auto.
Yeah.
What makes your product more compelling in those areas, and what are the functions that those batteries are being used for?
This is 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 a BESS, battery energy storage systems, which is predominantly providing a backup type solution. What we're targeting would be in-rack near the GPUs to help with high-quality, cost-effective delivery of power to the GPUs. 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 in all the infrastructure to deliver the average and allow the battery to do the buffering.
You save $hundreds of millions of CapEx type costs. You reduce the demands on the utility for power supply. 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. The second is safety, just because of the value of all of the assets in a data center. It's intuitive that you'd want that to be a very safe solution. Early days, we think that can be a very compelling fit, and we are getting a lot of inbound interest to explore that.
You'd be actually physically in the rack? Is that the idea?
It would be in a cabinet, dedicated, or in the same rack.
Okay. This would be different than the battery storage backup?
Correct, which is traditionally lithium-ion outside in a separate building.
Okay. Then the A&D opportunity, would you?
Aerospace and defense. Anything you put in the air, you want it to be light. You very much want extremes of power for takeoff. If you have humans in it, safety. The combination of weight, safety, and power we think is a great fit with anything aerospace related. Then defense, depending on the application, is those similar type attributes.
Got it. Okay. Where do you see, you mentioned, I think China being on LFP is $65-
Yeah
-pretty low. I don't think 10 years ago anyone-
Yeah
-thought 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 costs -
It's -
-below a moving target, I guess?
It's a great question. We're cheering for the industry to continue to make gains across the board in the materials, in the processing, in 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 didn't talk about this, secondarily, we have a bunch of savings in the formation step. 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 protective layer over the anode. We don't have an anode to form a protective layer over, so we can skip that step.
I believe Tesla has, or Panasonic has talked about, that's actually the most expensive step in their process, and we cut that down very substantially because we don't have an anode to do a protective layer against. Remind me the original question again. I lost my train of thought there for a second.
We were talking about the-
Oh
-the current tech getting lower.
Long-term costs.[crosstalk]
Long-term tech getting lower
Our goal is for our separator to be less than the cost of their separator plus the anode that we eliminate, and we have confidence in doing that. Our goal is to kind of undercut below. I think there will be continued cost improvement. I would highlight that the rate of energy density improvement in the lithium-ion space is very much slowing. We think getting onto a new platform, we get to restart the S curve, and we have a much more compelling R&D kind of roadmap. Our goal is to actually expand, over time, both the performance and the kind of cost savings.
At some point it hits a floor. I mean, a lead acid battery is stopped-
Yeah. You can never-
-falling in price every time. Yeah
[crosstalk] -one good thought experiment is just 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 year-over-year gains getting closer and closer to it. That's, to your point, it's a pretty efficiently made cell, and they are running out of opportunities to do that. We would be getting onto a new cost curve that's got a lot of room to run.
Who are your main competitors today? What does the landscape look like?
That's a good question. We divide the competitive landscape into two parts, into lithium-ion, which has that architecture that we discussed. That's what's widespread today. Then into lithium metal, where those are in the very early part of commercialization. On the lithium-ion space, we've talked about all the different advantages that we're targeting. We think there's structural reasons why you'd 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 a nice correlation with energy density.
If you have no excess lithium in the system, you have a big circle. If you have excess lithium, you have a small circle. The color is the difficulty of the other test conditions. Red has quite high power or pressure, which would, I think, limit the useful applications you'd kind of find. Blue you could probably do with the support of the system. Like an automotive product, you have the support of a system which can help with pressure and temperature. 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'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. In the fullness of time, it's 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. That's kind of the competitive landscape today.
We actually focus mainly, until we see someone show the chemistry works, a lot of our focus, we look at what are the trends being set by your CATL and BYD in terms of that inexpensive LFP cell. What are the LG and Panasonics doing in terms of that energy density rich kind of nickel cells, then we also have our eye on that.
What if investors were meeting with some of your competitors, everyone always spins their story positively. What do you think are the KPIs that you should be asking about to fairly compare?
It's just what's your prototype performance on all the dimensions at the same time. It's easy just to focus on one. It's like, "Oh, I have energy density of blank. I have fast charge time of blank." To have a product, it's a multipart and statement. You need to be small and light and fast charging and long-lived and hit your cost point in time. We've tried to be the standard bearers, just in terms of transparency for showing all these metrics simultaneously. I think if there was a single test, we would say, "Just plot yourself on this chart." It'd be a good one.
Cycle some charge time.
This has the long-term cycling. You're explicit on the rate, you're explicit on the temperature and the pressure. Then you're commenting if you're using excess lithium or not, which would be a real impediment to bringing out a product. If you add lithium that you don't need in a system, it's expensive, it hurts your energy density, probably hurts your life, and it's not needed. We think this is a very elegant single slide summary, it also, it's like, what have you demonstrated, not what are you trying to do.
Any questions? I don't know. All right. We've seen there's some headlines about BYD doing-
Yeah
-fast charging.
Yeah.
Some of your advantages are fast charging. What is the difference between what they're doing and what your technology can do?
A good example of, in that case, BYD only talked about the charge speed. I think it was something like in the five to six-minute type, ballpark, which is very compelling. But the question is, what are the rest of the metrics doing? 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 safety. It is helpful just to disclose the rest of the suite.
What is the challenge with their technology? It's just you don't have enough information.
No one does. It's not public.
Oh.
They published the charge speed in isolation.
Okay. You mentioned data center and Air & Defence.
A lot of people talk about drones.
They do.
I think there's almost like a solid-state competition that's almost unique there. Is that a market you're looking at now?
Yeah. I would put that into the aerospace and defense, if it could.
Oh, okay.
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. 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 point A to point B.
What about funding? I think you're burning a bit of cash now.
Yep.
How long?
So-
How do we think about the funding pipeline?
At end of Q, on our April earnings call talking about Q1 results, we had about $900 million of liquidity. That is very substantial funding relative to our cash burn rate. Because of the size of the balance sheet, a few quarters ago, when we started doing customer billings, we kind of retired giving cash runway until guidance. At the time when we took that out, it was into 2030. What we told investors at the time, you guys can see the balance sheet, you can see the cash burn. We think for the current early commercialization phase, that inflows from customers is maybe a more useful metric. It's very strong. We're a very well-capitalized company, and we think that as both a strength and a differentiator for us in the space.
Just to put out the other guidance, which we reaffirmed on the April earnings call. EBITDA loss between $250 million and $270 million is relatively flat year-over-year. $40 million-$60 million of CapEx, most of which is for the beyond, the QSE-5. We said we were tracking to year-over-year increases in the customer billings.
Okay. I think we're actually out of time.
Perfect.
Thank you very much for joining us. Thanks everyone.
Okay. Thank you, everybody.