Earnings call transcript: QuantumScape outlines Q2 2025 results and innovation steps

QuantumScape Corp (QS) recently held its Q2 2025 earnings call, reporting a GAAP net loss of $114.7 million and significant progress in its battery technology development. Despite a net loss, the company extended its cash runway to 2029, aiming for future growth in the automotive battery market. The stock, which has surged over 345% in the past six months according to InvestingPro data, closed at $16.99. With a current market capitalization of $9.4 billion, the stock is trading near its 52-week high of $17.79, suggesting strong investor interest despite recent volatility.

Key Takeaways

• QuantumScape reported a Q2 GAAP net loss of $114.7 million.
• The company extended its cash runway to 2029.
• Stock price fell 2.5% in recent trading.
• QuantumScape is advancing in solid-state battery technology.
• Partnerships with major automotive OEMs continue to expand.

Company Performance

QuantumScape’s Q2 2025 performance highlighted its commitment to innovation and strategic partnerships, despite operating at a loss. The company is focused on developing next-generation solid-state lithium-metal battery technology, which it believes will capture a significant share of the automotive battery market. This aligns with industry trends towards more efficient and sustainable energy solutions.

Financial Highlights

• Q2 GAAP Operating Expenses: $123.6 million
• Q2 GAAP Net Loss: $114.7 million
• Q2 Adjusted EBITDA Loss: $63 million
• Capital Expenditures: $8.3 million
• Ended Q2 with $797.5 million in liquidity

Outlook & Guidance

QuantumScape provided full-year guidance, expecting an adjusted EBITDA loss between $250 million and $270 million and capital expenditures ranging from $45 million to $65 million. The company is preparing for B1 sample shipments in 2025 and field testing in 2026, aiming to expand its automotive customer base. According to InvestingPro data, analysts expect the company to remain unprofitable this year, with a forecasted EPS of -$0.78 for FY2025. For deeper insights into QuantumScape’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

Dr. Siva Sivaram, CEO of QuantumScape, emphasized the company’s transition into the commercialization phase, stating, "We are now firmly in the commercialization phase of our company." He also highlighted the importance of technology adaptation for customers: "Our job is to make sure we take our technology platform and adapt it to this customer’s needs."

Risks and Challenges

• High operating expenses and net losses pose financial challenges.
• The competitive landscape in battery technology is intense.
• Dependence on successful commercialization of new technology.
• Potential delays in product development and customer acquisition.
• Macroeconomic factors could impact market conditions and partnerships.

Q&A

During the Q&A session, analysts inquired about the distinction between development payments and future licensing royalties. The company clarified its non-exclusive agreement with PowerCo and its approach to technology customization for different customers. These discussions highlighted QuantumScape’s focus on managing multiple customer relationships effectively.

Full transcript - Quantumscape Corp (QS) Q2 2025:

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Hey and welcome to QuantumScape’s second quarter 2025 earnings conference call. Dan Conway, QuantumScape’s Principal Analyst, Investor Relations. You may begin your conference.

Unidentified Speaker, QuantumScape: Thank you, Operator. Good afternoon and thank you to everyone for joining QuantumScape’s second quarter 2025 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. 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 statements for the reasons that we cite in our shareholder letter, Form 10-K, and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape CEO Dr. Siva Sivaram and our CFO Kevin Hettrich. With that, I’d like to turn the call over to Siva.

Dr. Siva Sivaram, CEO, QuantumScape: Thank you, Dan. Today we announced an expansion of our existing collaboration and licensing agreement with Volkswagen Group’s battery maker, PowerCo. This upgraded deal sees PowerCo contributing additional payments of up to $131 million to QS over the next two years to support our joint commercialization activities. These payments are connected with certain milestones to be achieved by a joint scale-up team. The first milestones, linked to expected payments of more than $10 million, have already been achieved. These new payments are additional to the previously announced $130 million that will be due to QS upon satisfactory technical progress and execution of the full licensing agreement. As part of this upgraded deal, QS will prioritize the output of QSE-5 cells from our San Jose pilot line to support our joint activities with PowerCo.

Though we maintain our non-exclusive arrangement and retain the right to provide cells to our other prospective customers, this expansion would allow PowerCo the right under the licensing agreement to produce up to an additional 5 GWh of QS cells annually, including for customers outside the Volkswagen Group, for a total of up to 85 GWh. PowerCo has also secured the future right to license certain advanced QS technology beyond our first-generation QSE-5 platform. This upgraded PowerCo deal, with new cash payments of up to $131 million over two years, clearly demonstrates the value of our solid-state lithium-metal technology platform to the automotive sector. We are extending our cash runway forecast into 2029, a six-month improvement relative to our previous guidance. Now a word on our commercial engagement beyond PowerCo.

We are happy to report that we have now entered into a joint development agreement with another major global automotive OEM. This JDA strengthens the collaboration beyond our initial sampling agreement with this customer, with the intent to work towards a commercialization and licensing deal. We continue to collaborate closely with existing and new customers, and we see market traction accelerating as these announcements provide commercial validation and increase urgency in the automotive space with respect to our broader QS ecosystem. Last quarter, we announced an agreement with Murata Manufacturing to explore collaboration on ceramics production, and this effort is progressing well beyond their world-class ceramics expertise. Murata provides particular value as a highly respected partner in the Japanese market where we see strong demand for solid-state batteries in automotive applications. Our Japanese subsidiary QS Japan is a valuable asset in demonstrating our technology leadership to this market.

Now an update on our annual goals. On June 24th, we announced the completion of the first of our annual goals. Our next-generation COBRA separator process has replaced Raptor as our baseline separator production process. We expect this step change in efficiency and productivity will enable B1 sample shipments this year, and we will continuously improve all aspects of the COBRA process as we ramp production. To keep pace with this higher rate of separator production, we are installing higher-volume cell production equipment, and we remain on schedule to meet this second 2025 goal. Production ramps are always challenging, and as we scale our cell production, we are focused on improving metrics such as cell reliability, process stability, and equipment uptime. Turning to our launch customer, in Q2 we shipped QSE-5 cells for pack integration and testing, including safety testing.

These cells were the final Raptor-based B0 samples to be shipped. Future shipments will be COBRA-based B1 samples. In line with our third annual goal, this launch program is designed to be a low-volume, high-visibility project that will allow us to put ourselves into a real-world vehicle application and generate customer feedback. We continue to target 2026 for the beginning of field testing. Last, I want to address our strategic outlook. This quarter is a major inflection point in our journey, and we are now firmly in the commercialization phase of our company. We believe this expanded deal with PowerCo is an unambiguous demonstration of both the economic value of our solid-state platform and the power of our capital-light business model. Under this model, we have the ability to monetize development activities early on and then collect licensing royalties as our customers ramp production volumes. We are just getting started.

We have a long and deep relationship with additional auto OEMs, and we continue to see these engagements intensify as demonstrated by our new JDA with an existing automotive customer. We believe our technology platform has the potential to revolutionize the automotive industry as well as other rapidly emerging markets, amounting to a total addressable market in the hundreds of billions of dollars annually. The challenges of scaling production remain significant, and there is still much work left to do. However, working together with our world-class partners, we believe we are closer than ever to achieving our long-term goals. With that, let me hand things over to Kevin for a word on our financial outlook. Thank you.

Kevin Hettrich, CFO, QuantumScape: Capital expenditures in the second quarter were $8.3 million. Q2 CapEx primarily supported facilities and equipment purchases as we prepare for higher volume QSE-5 platform sample production using the COBRA separator process. We narrow the range of our full year guidance for CapEx to be between $45 million and $65 million. We expect the second half of 2025 to see higher levels of CapEx investment relative to the first half of the year. Consistent with our narrowed guidance, GAAP operating expenses and GAAP net loss in Q2 were $123.6 million and $114.7 million, respectively. Adjusted EBITDA loss was $63 million in Q2, in line with expectations. The table reconciling GAAP net loss and adjusted EBITDA is available in the Financial Statement at the end of the shareholder letter.

We continue to streamline operations in line with the company’s capital licensing focus and capture gains from cost reduction initiatives and process improvement, including the COBRA process. We narrow the range of our full year guidance for adjusted EBITDA loss to be between $250 million and $270 million. The amended PowerCo Collaboration Agreement features payments up to $131 million over the next two years. Actual payments will be based on the scope of work and approved by the QS PowerCo steering committee. In Q3 2025, we expect to invoice PowerCo for more than $10 million for development work already performed by the joint team. We ended Q2 with $797.5 million in liquidity, and in light of the expanded PowerCo deal and efforts to further streamline operations, extend our guidance for cash runway into 2029, a six month improvement over our previous guidance.

Any additional funds from other customer inflows or capital markets activity would further extend this cash runway. As always, we encourage investors to read more on our financial information, business outlook, and risk factors in our quarterly and annual SEC filings on our investor relations website, including today’s PowerCo Amendment press release and 8-K with the redacted amendment.

Unidentified Speaker, QuantumScape: Thanks, Kevin. We’ll begin today’s Q and A portion with a few questions we received from investors or that I believe investors would be interested in. Siva, what is the significance of this expanded agreement with PowerCo? How does this fit in with our licensing business model?

Dr. Siva Sivaram, CEO, QuantumScape: Building upon what we just announced, our vision for the business model provides two sources of cash inflows. On the front end, we will monetize development activities for our customers to tailor our core technology to meet their specific needs. Subsequently, as the customer ramps production, we realize royalties over the lifetime of the project. Some of these payments could take the form of licensing fees or royalty prepayments as in the PowerCo deal. As we continue to develop further generations of our technology, we will maintain both lines of business to generate consistent and compelling cash flows. Payment for development activities has the benefit of being near term. The royalty payments represent the majority of the value capture through a consistent long term stream of high gross margin revenue. This business model is unlocked by our highly differentiated technology platform.

This expanded PowerCo deal is a validation of this vision with about a quarter of a billion dollars to bring this technology to market. This program will serve as a proof of concept of the QSE-5 technology and support other programs targeting Volkswagen Group vehicle applications such as Vehicle Demo fleet and other programs under the scope of the overall project covered by the collaboration agreement. The intention of the program is to leverage the combined expertise and resources of QuantumScape and PowerCo to advance the QSE-5 technology, ensuring its readiness for commercial application in the automotive industry. As part of this deal, PowerCo will be contributing up to $131 million to QuantumScape in order for a joint team in San Jose to accelerate the scale up of QuantumScape technology.

The agreement enables earlier PowerCo engagement in the QSE-5 production and automation efforts, advancing the ramp up of the QuantumScape San Jose pilot line. You can see that this expanded agreement is a clear signal of the growing strategic, technical and financial alignment between our two companies and reflects our shared confidence in QSE-5 as a game changing platform for the battery industry.

Unidentified Speaker, QuantumScape: Thanks, Eva. Kevin, can you expand more on the financial impact of this expanded agreement?

Kevin Hettrich, CFO, QuantumScape: The most important thing for investors to understand is that these are cash inflows from a customer. We expect these payments will reduce our GAAP net loss, improve our bottom line result, and help extend our cash runway in Q3. We plan to invoice PowerCo for more than $10 million tied to development activity already performed by the joint team. Our preliminary assessment is this will not be recognized as revenue. The work to determine the accounting treatment is ongoing. We will provide an update on the Q3 call. One further point, our narrowed adjusted EBITDA guidance is driven by operational improvements and does not reflect potential upside from this expanded PowerCo deal. We’d encourage investors to read our Form 10-Q, including the risk factors, as well as the amended press release 8-K and the redacted amendment for more information.

Unidentified Speaker, QuantumScape: Thanks, Kevin. Siva, can you elaborate further on the joint development agreement with a second major global automotive customer?

Dr. Siva Sivaram, CEO, QuantumScape: This is one of our existing customers with whom we have had a sampling agreement. We have now entered into a JDA with the intent to progress to a full commercialization and licensing arrangement with a global auto major. We are upgrading our relationship, deploying our high tech model to develop a customized solution for their needs, and ultimately progressing to a full licensing arrangement along the same lines as our PowerCo deal.

Unidentified Speaker, QuantumScape: Thanks. Last month we announced that the COBRA separator process has been baselined. Why was that such a significant accomplishment?

Dr. Siva Sivaram, CEO, QuantumScape: Dan, let’s look at the big picture. We don’t believe any solid-state technology can achieve the kind of no-compromise performance in range, charging, speed, safety, etc. without a ceramic separator. The ceramic separator is a key part of our anode-free, graphite-free lithium metal architecture. COBRA takes this technology differentiation to a whole new level. It’s really a transformative innovation in ceramics processing. Taking technical ceramic production and improving the heat treatment by more than 200 times is unheard of in the industry. Because of this advantage, COBRA is the most important technology element for gigawatt-hour scale production. In the near term, this is what we’ll be using to produce our B1 samples later this year and over the long term, it’s what our ecosystem partners will be using to ramp their production.

As impressive as COBRA is today, we believe that COBRA has significant headroom to improve even further now that it’s in our baseline. Our systematic and iterative improvement process will allow us to continue to build out and enhance the COBRA technology portfolio.

Unidentified Speaker, 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.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Thank you. To ask a question, simply press Star one on your telephone keypad. We do respectfully ask that you limit yourself to one question and one follow up. Our first question comes from the line of Winnie Dong with Deutsche Bank. Please go ahead. Hi. Thank you for taking my question. You talked about another global automotive OEM which you now have a JDA agreement with. I was wondering if you can elaborate a bit on the agreement. It seems like there are still more steps to take before an official licensing deal is signed. Can you just elaborate on what else needs to be done? You know, what the OEM is sort of looking for before they sort of go into this whole community.

Dr. Siva Sivaram, CEO, QuantumScape: Vinny, thanks for the question. The second deal we just announced after the expanded PowerCo agreement is that we have signed a JDA with a global auto major OEM here. Our job is to make sure we take our technology platform and adapt it to this customer’s needs. The JDA does exactly that. It makes sure that their specifications, the product that they need, we adapt our technology to that. Once we get that going, the same playbook that we have used with PowerCo, that same model applies. We as a joint team will make sure that we are transferring the technology to them to then ramp in volume. The playbook has been defined with the PowerCo agreement and we are doing the same thing into our next customer as we had originally planned. We have had this JDA now signed and ready to go.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Got it. Thanks for that color. You mentioned the first milestones are linked to the initial expected payment of $10 million, which has already been achieved, and you start to invoice that starting Q3. I was wondering if you can maybe delineate or outline some of the details on what might be associated with the next set of milestones and subsequent payments. How should we sort of understand that in the context of the original $130 million versus now? The expanded agreement would provide you an additional up to $131 million.

Dr. Siva Sivaram, CEO, QuantumScape: Vinny, just to make sure we are clear, this $131 million we just announced is distinct from the prior $130 million licensing prepay that we had announced that when we achieve certain milestones and we enter into the final licensing agreement, they pay us. This expanded agreement is really for the joint QS Power Core scale up team. The team is already here. We are together starting to do the industrialization activities. This is our way of monetizing those collaboration activities. We think in terms of our business model having two cash flow streams. The first cash flow being what we just talked about, adapting our technology to our customers’ needs, industrializing and transferring it. The second one is the longer term licensing and royalties payment. These two streams, these two cash flow streams, are distinct.

We are now demonstrating the first one, which is that in the short term we are starting to monetize our joint development activities and getting a cash flow stream out of it. As this team is already here, we are starting to work together. For some of the work already performed, we are starting to invoice PowerCo for that money. There is a joint PowerCo QuantumScape steering committee that runs this. Based on the statement of work, this steering committee will approve the invoices that we’ll continue to do with PowerCo. This is $131 million over two years.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Yeah. If I can just sneak one in, I think Kevin mentioned that preliminarily the $10 million that you will see to invoice is not going to be treated as revenue. Just for future, how do we sort of understand what flows through and how the treatment is going to be from an accounting standpoint?

Kevin Hettrich, CFO, QuantumScape: Hi Wendy.

Aman/Mon, Analyst, UBS: Thank you.

Kevin Hettrich, CFO, QuantumScape: Yeah, we did mention that we do expect this to improve the bottom line and not be revenue. On the Q3 call, we’ll give more of an update on the accounting treatment.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Okay, thank you.

Dr. Siva Sivaram, CEO, QuantumScape: Thank you.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Winnie, your next question comes from the line of Jed Dorschmeier with William Blair.

Mark/Jed, Analyst, William Blair: Hey team, you have Mark Shooter on for Jet Doorshimer. Congrats on the VW expansion. That’s great news. Dialing in a bit more on that, can you give us some color on what part of the manufacturing process and which part of the line you’re going to be investing in to increase the pilot capacity, and maybe some idea of what you’re expecting for the end capacity of the pilot line and a timeline expected to ramp.

Dr. Siva Sivaram, CEO, QuantumScape: Mark, thanks for the question. Just to be clear, we don’t intend to be a manufacturing company. We are always going to be a high touch technology licensing company where we develop the technology and develop and industrialize it and then transfer it to our customer. Having said that, we just announced COBRA, which gives a 25x improvement over Raptor, 200x over what we had done earlier in 2023. To match that level of separator output, we are increasing the cell build capacity so we can produce enough samples for us for this activity of industrialization of the core QSE-5 technology platform, which is what we are going to be doing. The output of it is primarily going to be used for the joint activity by this joint scale up team. The expectation is that I want to be a little bit boring here.

The idea of it being a systematic, methodical, iterative process that we do on our pilot sample production line will be done by this joint PowerCo QS scale up team. This $131 million is geared towards those pilot.

Kevin Hettrich, CFO, QuantumScape: Mark, just to draw the dots between what Siva was mentioning in our annual goals when we set out the goals for the year, this is how we hoped it would play out after achieving the first goal of baselining COBRA production, which we did in Q2. The second goal with that 25x higher productivity relative to Raptor is to lift the production capacity of the downstream assembly equipment to keep up with that significantly higher flow coming from the Raptor process.

Mark/Jed, Analyst, William Blair: That’s great. I appreciate the color. Hopefully the increased volumes will allow the iteration process to be a bit faster. Nice. I guess, touching, that’s great, the capacity as well. The VW agreement continues to expand, which is great. Now we’re sitting at 85 GWh, which is, you know, double of what Tesla produces at the Nevada facility with Panasonic. What do you think that VW needs to see to start to invest in a large facility, to start chipping away at that really large opportunity you guys have for licensing?

Unidentified Speaker, QuantumScape: Yeah.

Dr. Siva Sivaram, CEO, QuantumScape: I want to be very careful not to speak for my customer, Mark. It is theirs to decide how they ramp the factory at the rate that they do. Having said that, this expansion of the relationship clearly demonstrates that our interests are very aligned in this. We want to make sure this technology is transferred to them so that they can ramp and move very, very quickly. You can go to their site to see all the factories that they are building and what applications they are going to be doing, etc. Our partnership has been very, very strong. As I keep saying, there is a joint scale up team physically present in San Jose to accomplish this.

Mark/Jed, Analyst, William Blair: Appreciate that. Thanks. If I can squeeze one last one in, I know you don’t want to be a manufacturer and I fully appreciate that. Now you do have some capacity in a pilot line in the U.S. with a high energy density battery. I’m wondering if you’ve gotten any increased engagement from maybe U.S. defense contractors or drone manufacturers, given the executive orders of the Trump administration on drones.

Dr. Siva Sivaram, CEO, QuantumScape: Yeah. I want to talk about two Allied may not be directly answering to you, but you can see the possibilities here. One of the limitations of lithium-ion batteries is the presence of graphite. Graphite comes upper 90% from China. As you know, there is no major graphite production in that kind of quantities within the United States. Graphite is inherently dirty. It’s a greenhouse disaster trying to produce. The best way not to have graphite in your system is not to have an anode, which is what our technology is. We are a U.S. maker, a lithium metal anode-free technology. The last point I want to make is we are carefully curating and creating our ecosystem. The QS ecosystem provides that optionality of how a potential customer can use our technology and how to ramp.

We’ve been very, very careful in expanding our ecosystem to make sure that all of these new applications can also be served.

Mark/Jed, Analyst, William Blair: Thank you very much.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Your next question comes from the line of Ben Kello with Baird. Please go ahead.

Ben Kello, Analyst, Baird: Hey guys, good afternoon. Good evening. Thanks for taking my questions. Congrats on the two announcements. First on the JDA and then the expanded PowerCo. How many, and I know you have other potential customers, how many can you manage at one time, I guess is the question, both from an employee standpoint, a bandwidth standpoint, and then an equipment standpoint. The last piece, just meaning do you need a new COBRA for this JDA and the back end for the cells, or if you could just help with that, that would be helpful. Thank you.

Dr. Siva Sivaram, CEO, QuantumScape: Ben, you are absolutely right. There is an upper limit on how many we are going to be handling at the same time because we want to make sure we protect this technology to chosen customers with whom we can scale in high volume because we want it to be a high touch model. We had mentioned in our last earnings call that we were working with two other auto OEMs and we just signed one of them. We will be careful in choosing how fast we scale.

Mark/Jed, Analyst, William Blair: My name is.

Dr. Siva Sivaram, CEO, QuantumScape: You are right that we have to be making sure that we keep the intellectual property for each of them well protected, each of our customers, and making sure that we are servicing them very, very well. We have accounted for all of this in our current plans, and we will make sure that we keep updating you as we do sign more customers.

Ben Kello, Analyst, Baird: Thank you. Maybe one more on the expanded PowerCo agreement. You mentioned up to 85 GWh and how it wasn’t exclusive. Could you talk more about how different the process is to keep it not exclusive from what’s under the PowerCo? I guess it follows onto the same similar question from before. With the next customer, do you have to change the process or how much different is it than what you’re doing with the PowerCo?

Dr. Siva Sivaram, CEO, QuantumScape: Yeah, just to be clear, we do have a non-exclusive arrangement with PowerCo. PowerCo has been our first customer, an amazing partner, and we are working very well with them. Clearly, each auto OEM has their own specifics on how they like their batteries and the product specifications that they like to use. We have developed a core technology platform, which we then work with each of them to modify. Some can be maybe form factor change. Some of them may be specifications tightened in one way or the other. Many such things will be customized for each of them, and that’s exactly what we are doing right now. The first generation is being customized for PowerCo, and the second, JDA envisions doing the same thing for the second customer.

Ben Kello, Analyst, Baird: Great. Thank you guys very much.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Your next question comes from the line of Gabriel Gonzales with UBS.

Mark/Jed, Analyst, William Blair: Hey guys, this is Gabriel Onpergeaux. Thanks for taking my questions. Kevin, just wanted to touch on the original $130 million prepayment. Can you give us some high level color on how that’s progressing generally and what’s a ballpark expectation of when that comes to fruition?

Kevin Hettrich, CFO, QuantumScape: Thank you, Gabe. As we stated in the press release last year, the joint QS PowerCo team needs to make satisfactory technical progress towards QSE-5 industrialization. After which we grant PowerCo the license and they make the $130 million prepayment. Our public goals are aligned with that technical progress and we just need to keep our heads down and keep executing.

Mark/Jed, Analyst, William Blair: Understood. Okay. It’s encouraging with the new $131 million upgraded deal from PowerCo that you extended the cash runway into 2029. However, the stock has also had quite an impressive rally in recent weeks. Given where we stand now, how are you thinking about sort of tapping into the equity markets here to further shore up the cash position on the balance sheet?

Kevin Hettrich, CFO, QuantumScape: Our job as a management team is to set out to do important things that create value for the company and to do so systematically, methodically, and iteratively. We value a strong balance sheet. It’s a differentiator for the company, and we commit to continue to be strategic regarding any capital markets activity.

Mark/Jed, Analyst, William Blair: Thanks for the comment.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: Your next question comes from the line of Mark Delaney. Please go ahead.

Aman/Mon, Analyst, UBS: Hi, you have a line of dawn from Mark Delaney. Just kind of going back to this PowerCo expanded agreement. Can you talk about the implications from an OpEx and CapEx standpoint? Appreciate the color on the $1 million or the $10 million not coming through as revenue. How should we think about that hitting on the EBIT level? Is there any margin associated with that revenue or just any color you could provide?

Dr. Siva Sivaram, CEO, QuantumScape: That would be great.

Kevin Hettrich, CFO, QuantumScape: Thank you, Mon. Just to highlight a few things that I mentioned before. In Q3, we plan to invoice PowerCo for more than $10 million for development activity already performed by the joint scale-up team. This will mark the first meaningful non-dilutive cash inflow from a customer, and we expect this will improve the bottom line. Our preliminary conclusion is this will not be accounted for as revenue, and the work to determine the accounting treatment is underway. We plan to provide an update on the Q3 call. We would encourage investors to read our Form 10-Q, including the risk factors, as well as the press release and the 8-K. The 8-K does include a redacted form of the amendment.

Aman/Mon, Analyst, UBS: Just to kind of maybe follow up on that. Is there any incremental, maybe to phrase it a little better, is there any incremental OpEx or CapEx under the expanded agreement, or is this just kind of payments for the already existing OpEx and CapEx that was planned for?

Kevin Hettrich, CFO, QuantumScape: That’s a good question. Are long-term operational plans included? The bulk of the work and the statement of work, so from that point of view these inflows are accretive.

Aman/Mon, Analyst, UBS: Understood. The second part of my second question would be around this JDA. What are the sort of milestones? I know you spoke about needing to kind of fit the specs to the customer’s needs. Any sort of specifics on what type of technical milestones that would look like or timeframe in which that would happen, and how much, kind of to the earlier question, bandwidth you have to support that while you’re still prioritizing the PowerCo agreement under the new deal.

Mark/Jed, Analyst, William Blair: Thank you, Aman.

Dr. Siva Sivaram, CEO, QuantumScape: Just like Kevin just alluded to.

Unidentified Speaker, QuantumScape: These.

Dr. Siva Sivaram, CEO, QuantumScape: are already in our longer term plans, and this work is also in our works already. This second JDA is something we announced the possibility of in the last quarter, and we are following through with it. These are well accounted for in the financials that we have put out.

Kevin Hettrich, CFO, QuantumScape: As a technology licensing company, our first job is to develop differentiated technology, and as you know, in a licensing business model there’s a lot of operating leverage. We celebrate the opportunity to specialize and to tailor our technology to their specific needs towards that two-phase cash flow set of cash inflows that Siva mentioned, both to monetize the upfront tailoring under the collaboration phase towards longer-term royalty inflows, as we jointly have success helping them scale up their factories.

Dan Conway, Principal Analyst, Investor Relations, QuantumScape: As a reminder to ask a question, press star one on your telephone keypad. I will now turn the call back over to Dr. Siva Sivaram for closing remarks.

Dr. Siva Sivaram, CEO, QuantumScape: Thank you, operator. I’d 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.

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