QuantumScape Corporation

Good day and welcome to QuantumScape's fourth quarter and full year 2021 earnings call. John Sager, QuantumScape's head of investor relations, you may begin your conference.

Thanks, operator. Good afternoon and thank you to everyone for joining QuantumScape's fourth quarter and full year 2021 earnings conference 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 statement that is posed on our website and as part of our quarterly update. Forward-looking statements generally relate to future events 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. The Safe Harbor provision identifies 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 Form 10-K and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape's co-founder, CEO, and chairman, Jagdeep Singh, and our CFO, Kevin Hetrick. Jagdeep will provide a strategic update on the business, and then Kevin will cover the financial results and our outlook in more detail. With that, I'd like to turn the call over to Jagdeep.

Thank you, John. The past quarter marked the close of our first full year as a public company and we're proud to say that it was a successful one. At the beginning of 2021, we set out four key goals for ourselves. First, build single layer cells using separators with commercially relevant thickness, a technical milestone set jointly with Volkswagen. The next two were to demonstrate that our single layer cells can be scaled up to four and then 10 layer cells without adversely impacting fundamental cycling behavior. The last goal was to secure space and begin build out of our QS0 pre-pilot production facility. Thanks to the dedicated efforts of our team, we completed all four of these goals on schedule. We achieved our final 10-layer milestone in November last year, and today we can report that additional 10-layer cells have reached 800 cycles, replicating the long-term cycling performance we first demonstrated in single-layer cells a little over a year ago. Our technical development continues to progress rapidly. Today, we're excited to announce results from our first 16-meter cells at the amp-hour scale. While we generally do not expect first prototypes to demonstrate cycling results that match more mature designs, we were pleased to note that over early cycles, the very first 16-meter cell we put on our cycle-like test showed energy retention behavior substantially similar to that of our single, four, and 10-meter cells. providing a solid basis upon which we expect to rapidly iterate and improve in the coming weeks and months. We're also excited to share new data on single layer cells. Single layer data is important because it indicates the level of performance that can be achieved in a well-designed multi-layer cell. At the single layer level, we have now shown full area cells operating with zero externally applied pressure, reaching 800 cycles under what we consider to be gold standard testing conditions. one-hour charge, room temperature, and 100% depth of discharge simultaneously. To our knowledge, this represents a word first for any lithium metal battery and allows us to not only build more efficient packs for the automotive application, but also opens up sectors like consumer electronics, which don't have the physical room for pressure application apparatus. On the customer front, we recently announced a new strategic relationship with Fluence, a global leader in stationary energy storage. We believe this demonstrates that our lithium metal technology presents a compelling value proposition in energy storage applications, which potentially represents a multi-hundred billion dollar opportunity. Over the course of 2021, we also announced two customer sampling agreements, one with a global top 10 automaker and the other with an established global luxury OEM. Including our longstanding relationship with Volkswagen, we now have agreements with customers collectively representing more than 15% of global automotive sales in 2020. We believe this continued customer interest reflects widespread demand for a better battery. To meet this demand, we are working on ramping up our production capabilities, and our key milestones for 2022 are focused on executing the most important aspects of our scale-up. Our first goal for 2022 is to demonstrate our proprietary cell format. Our ceramic solid electrolyte separator enables the use of a lithium metal anode and does so in a cell that is anode-free as manufactured. This architecture potentially unlocks a host of benefits such as improvements to energy density, charging speed, cycle life, safety, and cost.