Core Viewpoint - QuantumScape is advancing its solid-state battery technology, which is crucial for the future of electric vehicles (EVs), but it remains in the pre-revenue stage and faces significant competition and challenges ahead [2][10]. Group 1: Company Overview - QuantumScape is focused on developing next-generation solid-state lithium batteries for EVs, aiming to improve energy density, charging speed, and safety [5]. - The company went public in November 2020, initially seeing its stock price soar to $132 per share due to investor enthusiasm for EV technology [4]. - QuantumScape has a significant partnership with Volkswagen, which has invested nearly $300 million and formed a joint venture to help scale production [7]. Group 2: Technological Developments - The company is working to address the limited driving range of current EVs, targeting a minimum of 300 miles per charge to compete with traditional vehicles [5]. - QuantumScape's solid-state battery recently passed an endurance test, completing over 1,000 charging cycles and demonstrating the potential for over 500,000 kilometers of driving without significant range loss [7]. Group 3: Financial Position - QuantumScape is currently pre-revenue, with a net loss of $468 million over the past 12 months, indicating ongoing financial challenges as it develops its technology [7]. - A recent agreement with Volkswagen's PowerCo allows for the mass production of QuantumScape's batteries, with a capacity of up to 40 gigawatt hours per year, potentially powering one million vehicles annually [8]. - The deal includes a $130 million prepayment of royalties, extending QuantumScape's cash runway by 18 months into 2028 [9]. Group 4: Market Position and Competition - QuantumScape faces competition from other battery developers, including major players like Toyota and Nio, which may impact its market position [10]. - The stock is characterized as high-risk and high-reward, suitable for investors with a high tolerance for risk and a long investment horizon [10].

Core Insights - QuantumScape is addressing key challenges hindering electric vehicle (EV) sales growth, including range anxiety, charging times, and battery safety [1][3] - The potential market for QuantumScape's solid-state battery technology is significant, as it could alleviate concerns among potential EV buyers [2][3] - The company is on a transitional path in 2024, with plans to introduce its first commercial product and scale up manufacturing processes [4] Company Developments - QuantumScape's solid-state lithium-metal battery technology offers advantages over conventional lithium-ion batteries, such as nonflammable electrolytes, fast charging in approximately 15 minutes, improved battery cycle life, and lower manufacturing costs [4] - The company has a two-stage plan for mass production, currently ramping up the "Raptor" process for low-volume prototypes and preparing for the "Cobra" stage in 2025 [4][8] - A recent partnership with PowerCo, Volkswagen's battery division, is expected to support QuantumScape's EV technology growth and extend its cash balance into 2028 [6][7] Financial Outlook - The capital-light approach from the new agreement with PowerCo is projected to extend QuantumScape's cash runway by about 18 months compared to previous estimates [7] - The partnership sets a framework for mass production that can be utilized with other customers, as the licensing is non-exclusive [7] - Despite the advantages of the new agreement, the company remains speculative, with significant risks associated with achieving production at scale [10]

QuantumScape is pre-revenue, and faces many challenges, but now might be the perfect time to buy with recent EV pessimism dragging the stock down. Investors throw around the buzzword "game-changing" far too often. It's rare when a company can create something truly groundbreaking that will change its industry substantially. QuantumScape (QS -5.73%) is attempting to do what nobody else has accomplished: Bring solid-state battery technology to electric vehicles (EVs). If it's successful, in a timely fashion, ...

Core Viewpoint - QuantumScape Corporation (NYSE:QS) is rated as a buy due to its potential upside if it successfully delivers its solid-state battery products, with recent progress in R&D, manufacturing, and a positive licensing deal with PowerCo strengthening its financial position [4][18]. Business Description - QuantumScape designs and manufactures solid-state lithium-ion batteries for electric vehicles, offering advantages such as enhanced safety, faster charging, and higher energy density compared to traditional batteries [5]. - As of Q2 2024, QuantumScape is not generating revenue and reported an operating loss of $134 million and an EBITDA loss of $72.5 million, indicating it is still in the R&D phase and experiencing cash burn [5]. Positive on Licensing Deal - The licensing agreement with PowerCo includes a $130 million royalty pre-payment, which alleviates financial pressure and extends QuantumScape's cash runway significantly [6]. - This deal also transitions QuantumScape to a more asset-light operating model, potentially leading to higher free cash flow in the future [6]. R&D and Manufacturing Process on Track - QuantumScape's R&D and manufacturing processes are reportedly on track, with robust customer engagements and successful prototype shipments to various sectors [8]. - The prototype testing has shown promising thermal stability, with tests indicating stability up to 300 degrees Celsius, which is significantly higher than conventional lithium-ion cells [8]. Key Milestones and Financial Outlook - A critical milestone is the successful production of a B-sample by the end of 2024, which would indicate the viability of the Cobra manufacturing process [10]. - QuantumScape's balance sheet is projected to sustain operations until it begins generating meaningful revenue, with total cash and equivalents estimated at around $1.2 billion post-PowerCo deal [12]. Valuation - Forecasting revenue is challenging due to the lack of historical data, but management initially expected revenue generation in FY24 and positive EBITDA by FY27. Current projections suggest a delay, with high-volume production not expected until FY25 [14]. - Assuming QuantumScape achieves an EBITDA target of approximately $1.6 billion by 2030, the enterprise value could reach around $19.5 billion, translating to a target share price of approximately $39 [16].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) | Delaware | 85-0796578 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identificatio ...

Core Viewpoint - Investors are awaiting significant progress from QuantumScape, a development-stage technology company focused on solid-state batteries, as it continues to manage cash burn and work towards a viable product [2][5]. Financial Performance - QuantumScape reported a GAAP loss of $134.5 million for the second quarter, an increase from $123.5 million in the same quarter last year, with a loss per share of $0.25, slightly worse than the estimated $0.22 per share [8]. - The company anticipates an adjusted EBITDA loss of $250 million to $300 million for 2024 [9]. Strategic Developments - A new agreement with PowerCo, Volkswagen's battery division, has extended QuantumScape's cash runway to 2028, 18 months longer than previously expected, and includes a non-exclusive licensing agreement that could yield $130 million in royalties upon reaching specific technical targets [3]. - Progress has been reported in the production of battery cells, with the company on track to complete the Raptor process ramp-up, which is the initial stage of its fast separator production process [4]. Market Reaction - Following the announcement of the second-quarter results and modest progress, shares of QuantumScape fell by 9.58%, with a reported decline of 8.3% at one point during the trading day [6][7].

Financial Data and Key Metrics Changes - The company reported capital expenditures of $18.9 million in Q2, primarily for equipment purchases related to QSE-5 prototype production and the Cobra process [24] - GAAP operating expenses were $134.5 million, with a GAAP net loss of $123 million, and an adjusted EBITDA loss of $72.5 million for the quarter [25] - The company ended the quarter with $938 million in liquidity, projecting a cash runway extension into 2028, an 18-month increase from previous guidance [26] Business Line Data and Key Metrics Changes - The licensing agreement with PowerCo allows for an initial production volume of 40 gigawatt hours per year, with an option to expand to 80 gigawatt hours, sufficient for approximately 1 million vehicles annually [17] - The company has shipped Alpha2 prototype cells to multiple customers in the automotive and consumer electronics sectors, indicating robust customer engagement [20] Market Data and Key Metrics Changes - The collaboration with PowerCo is expected to leverage the investments made by automotive OEMs, particularly the Volkswagen Group, to industrialize the company's battery technology [6] - The company sees a significant market opportunity in the next-generation battery sector, potentially worth hundreds of billions of dollars annually [28] Company Strategy and Development Direction - The licensing model is viewed as a capital-efficient path to market, allowing the company to focus on innovation while utilizing PowerCo's manufacturing capabilities [19] - The company aims to develop a global manufacturing ecosystem for its solid-state lithium-metal battery technology, with the PowerCo collaboration serving as a template for future deals [30] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the collaboration with PowerCo, viewing it as a critical step in revolutionizing energy storage and creating shareholder value [7] - The company acknowledges that significant work remains to achieve its ambitions but is optimistic about the potential of its technology in the EV market [7] Other Important Information - The company has made progress in safety testing, demonstrating thermal stability of its prototype battery cells up to 300 degrees centigrade, which could open new markets [22] - The licensing agreement includes a $130 million prepayment of royalties contingent upon satisfactory technical progress, which will contribute to the company's cash runway [17][67] Q&A Session Summary Question: Why is the PowerCo deal significant for QuantumScape? - The deal demonstrates the value created for customers and shareholders, allows rapid scaling of technology, is non-exclusive for future deals, and represents an efficient resource allocation [31] Question: How does this agreement benefit investors compared to the previous joint venture? - The capital-light approach frees up previously earmarked funds and reduces expected costs for industrializing technology [32] Question: What is the timeline for the partnership and commercialization? - The timeline for B-sample production and other goals remains unchanged, with immediate collaboration work beginning [38][48] Question: How will the joint collaboration team operate? - A joint scale-up team of around 150 experts will begin collaboration activities, transitioning to a PowerCo facility as production ramps up [45] Question: Will more deals like this follow? - The company expects significant interest in its technology but will be strategic in selecting future partners [50] Question: Can you provide details on the monetization of the PowerCo agreement? - Specific details on the royalty structure are outlined in the contract, but the company will not disclose further details [53] Question: How does the $130 million royalty prepayment affect cash runway? - The prepayment is contingent on technical progress and is factored into the cash runway forecast [56][67] Question: Are there discussions with eVTOL companies? - The company is in conversations with eVTOL companies, but its primary focus remains on the automotive sector [75]

Financial Performance - GAAP operating expenses for Q2 were $134.5 million, with a GAAP net loss of $123.0 million; Adjusted EBITDA loss was $72.5 million[12] - The company maintains its full-year 2024 guidance for Adjusted EBITDA loss to be between $250 million and $300 million[12] - Operating expenses for the three months ended June 30, 2024, were $134,457 thousand, up from $123,542 thousand for the same period in 2023, indicating an increase of approximately 11.5%[30] - Research and development expenses rose to $97,746 thousand for the three months ended June 30, 2024, compared to $86,453 thousand for the same period in 2023, marking an increase of about 13.2%[30] - Net loss attributable to common stockholders for the three months ended June 30, 2024, was $(122,975) thousand, compared to $(116,521) thousand for the same period in 2023, reflecting a loss increase of approximately 5.5%[30] - The GAAP net loss attributable to common stockholders for the three months ended June 30, 2024, was $122,975,000, compared to a loss of $116,521,000 for the same period in 2023, representing an increase of 3.9%[32] - Adjusted EBITDA for the three months ended June 30, 2024, was $(72,513,000), compared to $(63,522,000) for the same period in 2023, indicating a decline of 14.9%[32] - Non-GAAP operating loss for the three months ended June 30, 2024, was $(86,632,000), up from $(73,550,000) in the same period of 2023, reflecting a 17.8% increase in losses[32] - Basic and diluted net loss per share for the three months ended June 30, 2024, was $(0.25), compared to $(0.26) for the same period in 2023, indicating a slight improvement in loss per share[30] Cash Flow and Liquidity - The company ended Q2 with $938 million in liquidity, supporting its ongoing development and production efforts[12] - Cash, cash equivalents, and restricted cash at the end of the period increased to $214,436 thousand from $250,363 thousand at the beginning of the period, showing a decrease of about 14.3%[31] - Net cash used in operating activities for the three months ended June 30, 2024, was $(65,151) thousand, compared to $(57,675) thousand for the same period in 2023, indicating an increase in cash outflow of approximately 12.9%[31] - Proceeds from maturities of marketable securities were $509,204 thousand for the three months ended June 30, 2024, compared to $261,440 thousand for the same period in 2023, representing an increase of about 94.9%[31] Assets and Liabilities - Total current assets decreased from $1,083,517 thousand as of December 31, 2023, to $973,469 thousand as of June 30, 2024, representing a decline of approximately 10.2%[29] - Total liabilities increased from $161,801 thousand as of December 31, 2023, to $214,702 thousand as of June 30, 2024, reflecting an increase of about 32.5%[29] - Total stockholders' equity decreased from $1,338,407 thousand as of December 31, 2023, to $1,180,269 thousand as of June 30, 2024, reflecting a decline of approximately 11.8%[29] Production and Technology Developments - QuantumScape announced a licensing agreement with PowerCo, extending its cash runway into 2028, an 18-month increase from previous guidance[1] - The agreement includes a $130 million prepayment of royalties and a non-exclusive license for an initial production volume of 40 GWh per year, with an option to expand to 80 GWh, sufficient for approximately one million vehicles annually[2] - The Raptor process is on track to enable initial low-volume B-sample production of the QSE-5 product, with Cobra set to facilitate higher-volume production next year[6] - Prototype cells based on the Alpha-2 design demonstrated thermal stability up to 300°C, significantly higher than conventional lithium-ion cells, which fail between 174°C and 185°C[9] - The collaboration with PowerCo is expected to minimize the time to gigawatt-hour scale production and potentially quadruple capacity compared to the previous joint venture arrangement[20] - The partnership with PowerCo is seen as a template for future collaborations, leveraging their industrial expertise to address production challenges[4] Other Financial Information - Stock-based compensation for the three months ended June 30, 2024, was $47,825,000, slightly down from $49,992,000 in the same period of 2023[32] - Depreciation and amortization expense for the three months ended June 30, 2024, was $14,119,000, compared to $10,028,000 for the same period in 2023, showing a 40.8% increase[32] - Interest expense for the three months ended June 30, 2024, was $(11,454,000), compared to $(6,717,000) for the same period in 2023, indicating an increase in interest costs[32] Legal and Forward-Looking Statements - The company is currently involved in a pending settlement of a securities class action litigation, which may impact future financial results[32] - Forward-looking statements indicate that the company anticipates future developments in its battery technology and operational plans, although specific outcomes remain uncertain[34] - The company emphasizes the importance of reviewing reconciliations of non-GAAP financial measures to GAAP measures for a comprehensive understanding of financial performance[33]

Core Viewpoint - QuantumScape's stock has seen a significant rise, particularly a 66% increase in July, recovering from earlier losses and now up 17% year-to-date, raising questions about its potential for future growth [2][8]. Group 1: Company Developments - QuantumScape is focused on developing solid-state batteries for electric vehicles, claiming these batteries offer advantages over traditional lithium-ion batteries, such as faster charging and longer range [3][10]. - The company has a partnership with Volkswagen, which is a key factor in the current bullish sentiment surrounding QuantumScape [6]. Group 2: Financial Performance - In Q1 2024, QuantumScape spent $14.1 million on capital expenditures (capex) and projected a full-year capex between $70 million and $120 million. Additionally, it spent $84 million on research and development in the first three months of the year [5][12]. - QuantumScape is currently a pre-revenue business, which means its operating losses are expected to continue impacting its balance sheet and liquidity [13][15]. Group 3: Market Position and Valuation - As of now, QuantumScape has a market capitalization of approximately $4 billion, which raises concerns about justifying such a high valuation given that the company has not yet monetized its products [14]. - The stock has been highly volatile, with a 29% decline from January to June 2024, contrasting with the overall market performance where the S&P 500 gained 14% and the Nasdaq Composite rose by 18% [8][15].

Core Insights - QuantumScape's stock has experienced significant volatility in 2024, initially dropping 29.2% in the first half of the year due to concerns over the global EV industry's slowdown, but rebounding with a 78% increase in July, leading to a year-to-date gain of nearly 27% [3][10][13] Company Developments - QuantumScape is focused on developing solid-state batteries that are lighter, safer, and more energy-dense than traditional lithium-ion batteries, with faster recharge capabilities [2] - The company has secured a landmark agreement with Volkswagen's battery subsidiary, PowerCo, allowing PowerCo to mass-produce battery cells using QuantumScape's technology, which is seen as a strong endorsement of its technology [5][10] - QuantumScape ended the first quarter of 2024 with $1 billion in liquidity, providing a cash runway expected to last through the latter half of 2026, enabling the company to start production and sales [5] Leadership Changes - QuantumScape appointed Dr. Siva Sivaram as the new CEO, replacing Jagdeep Singh, who remains as chairman of the board. This leadership change aims to leverage Sivaram's manufacturing experience to guide the company towards production [8] Product Milestones - The company achieved a significant milestone by shipping its Alpha-2 prototype battery to automotive customers, which will help incorporate customer feedback before the production of its first commercial product, QSE-5 [11] Market Concerns - Despite the positive developments, there are ongoing concerns regarding QuantumScape's future potential, especially as Volkswagen is reportedly exploring other solid-state battery manufacturers, which could impact its partnership with QuantumScape [12]