Q3 2024 Quantumscape Corp Earnings Call

In This Article:

Participants

John Saager; Vice President, Capital Markets and FP&A; Quantumscape Corp

Siva Sivaram; President, Chief Executive Officer, Director; Quantumscape Corp

Kevin Hettrich; Chief Financial Officer; Quantumscape Corp

Winnie Dong; Analyst; Deutsche Bank

Ben Kallo; Analyst; Robert W. Baird & Co

Mark Shooter; Analyst; William Blair

Presentation

Operator

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.

John Saager

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.
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 statement 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's CEO, Dr. Siva Sivaram; and our CFO, Kevin Hettrich. With that, I'd like to turn the call over to Siva

Siva Sivaram

Thank you, John. I'd like to begin by discussing the most significant achievement in our company's history. We are excited to report that we have begun producing low volumes of our first B-sample cells, accomplishing our most important goal for 2024, and we have begun shipping these cells for automotive customer testing.
These are B-samples of QuantumScape's first product, QSE-5, with measured energy density of 844 watt hours per liter, capable of fast charging from 10% to 80% in just over 12 minutes. QSE-5 represents an important milestone for our company and the battery industry as a whole. These cells are to the best of our knowledge, the first anode-free solid-state lithium-metal cell design ever produced for next-generation automotive applications.
This cell is capable of simultaneously delivering exceptional performance with respect to energy density, discharge power, charging speed, low-temperature performance, and safety. This milestone marks a new stage of rigorous development and production efforts.
Now that the product design and performance profile is set, and we have established a baseline process, we will continue to ship samples get customer feedback and refine our processes. During this B-sample phase, iterations of these samples will be subject to extensive product testing, which will take many months to complete. We have to substantially improve on metrics such as cell reliability, yield, and equipment productivity, among others.
Next, I'd like to share an update on our progress on separator production. The first implementation of our disruptively fast separator production process is named Raptor. And as of Q3, Raptor is now our baseline. We set this as a key annual goal because Raptor is a major improvement from our last-generation technology in film quality and performance, heat treatment time, and energy consumption. We expect that Raptor will continue to support our QSE-5 sample output into 2025.
Beyond enabling B-samples, Raptor serves as a learning platform and transitional step to our Cobra process, which we continue to see as our best pathway to gigawatt hour scale separator production. We are preparing for Cobra production to enter our baseline in 2025. We expect Cobra heat treatment equipment will be in place by the end of 2024. And with the addition of higher volume downstream automated equipment, this line will enable a significant increase in separator production.
Next, I'd like to briefly update on our joint work with PowerCo, the battery manufacturer of the Volkswagen Group. As a reminder, we have signed a landmark agreement with PowerCo to bring our QSE-5 technology platform into mass production at the gigawatt hour scale. The first phase of this agreement includes intensive collaboration with PowerCo contributing skilled personnel to aid the industrialization of the QSE-5 platform.
Upon satisfactory technical progress in this phase, QuantumScape will grant PowerCo a license to mass produce battery cells in exchange for royalty payments, including a $130 million prepayment. The collaboration phase kicked off in Q3 with joint development activities at our San Jose facilities.
During this phase of the project, we combine our QSE-5 platform and deep knowledge of solid-state battery technology with PowerCo's expertise in scaling up high-volume manufacturing processes. PowerCo is well-positioned to contribute in areas such as supply chain, reduction equipment and automation.
Last, I want to put this quarter's achievements in context. This is a proud moment for the entire QuantumScape team. We have accomplished our most important goal. We have started producing B-samples of our QSE-5 product and began shipping them for customer testing. We believe these cells represent a new high water mark for the battery industry.
This is the moment we've been waiting for, the start of the climb towards industrialization. To make the kind of impact on electric transportation, we believe this technology is capable of, we will need enhanced manufacturing processes, which can make millions of cells per year with defectivity rates on the order of a few cells per million or lower. It will require a sustained effort and deep collaboration with partners, including the Volkswagen Group and PowerCo to achieve such a massive scale.
With those long-term goals in mind, shareholders should take a balanced view of the achievement we have announced today. It is no more than the first shipment of early low-volume QSE-5 B-samples. But at the same time, we believe it is no less than a true world first an anode-free solid-state lithium-metal battery capable of revolutionizing electric vehicle performance.
A cell with the potential to offer what drivers are demanding, much longer range, faster charging powerful acceleration and better safety, all at the same time. Thank you for your continued support, and we look forward to updating you on further progress in the months to come.
With that, I'll hand things over to Kevin.