QuantumScape Corporation

Good afternoon, and thank you for attending today's QuantumScape Corporation fourth quarter 2022 earnings call. My name is Jason, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call for an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I'll now pass the conference over to our host, John Sager.

Thank you, Operator. Good afternoon and thank you to everyone for joining QuantumScape's fourth quarter 2022 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 QuadScape's co-founder, CEO, and chairman, Jeff Debsame, and our CFO, Kevin Hattrick. CheckDeep 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 CheckDeep.

Thank you, John. In 2022, we made significant advances in our technology, encountered and overcame obstacles, and ultimately achieved our major goal for the year. I'd like to briefly recap our key results in 2022 and provide an overview of our plans for 2023. Our most important goal for 2022 was to ship our first 24 Mare A0 prototype battery cells to customers. To achieve this, we needed to incorporate several improvements into our system, from separator film and cap-out production to cell assembly, focused on the quality, consistency, and throughput of our designs and processes. We're pleased that the team successfully incorporated these improvements and rallied to meet our target of shipping 24 Mare A0 cells to customers by year-end. We see this as a demonstration of the team's ability to overcome adversity and deliver on our goals. While specific customer testing protocols and results can't be disclosed, we can report that generally, most cells have performed well on initial testing, including fast charge and early cycle capacity retention. However, we need to continue to improve cell reliability as we move from prototype to product. This is a key focus area for 2023, And we expect that as we make progress on the quality and consistency of our materials and processes, reliability will continue its upward trajectory. We believe this 24-layer A0 milestone represents a significant step forward. But more work remains to turn our technology into a commercial product. I'll discuss some of these remaining steps when I lay out our 2023 goals. The A0 prototypes also incorporate our proprietary cell architecture. a hybrid between pouch and prismatic cell formats designed to accommodate the volume expansion and contraction that occurs during the charge and discharge of lithium metal cells. We shared the first images of this new architecture in our shareholder letter and intend to share more details on this architecture later in the year. In addition to our cell development progress, in 2022, we also focused on scaling up cell production. One goal was to continue the build out of our QS0 pre-pilot production line by taking delivery of a majority of the necessary equipment. We've merged our phase two engineering line with QS0 and have now received a majority of the tools necessary for initial lower volume production on this consolidated QS0 line. Our final key goal for the year was to scale up production of our ceramic solid electrolyte separator to a peak level of 8,000 weekly film starts. We achieved this goal, which demonstrates progress in process development, equipment qualification, and manufacturing capability. Next, I'd like to briefly discuss our customer engagement. Over 2022, we continued to see strong interest in next-generation batteries, or EVs, from a variety of automotive OEMs. And as we previously reported, this culminated in sampling agreements with three more automakers, including a top 10 automotive OEM by global revenue, and a pure play EV OEM. For the consumer electronics industry, we ship dozens of single-layer pouch cells for customer testing with zero externally applied pressure. We're pleased to report that the sister cells from the sampling campaign we reported on last quarter have now surpassed 800 cycles. We believe this exceeds the requirements for many consumer electronics applications. Now I'd like to lay out our goals for 2023. Beyond A0 prototype shipments, we plan to focus on subsequent generations of prototype samples, incorporating advances in cell functionality, process, and reliability, as well as bringing online the manufacturing capability of our consolidated QS0 line. Our goals for the year are focused on these four items. Our first goal is to increase capital capacity loading to approximately 5 milliamp hours per centimeter squared. As in conventional lithium ion batteries, Our cathode can be optimized either for better energy density or higher rates of power. We believe our current loading of approximately 3 milliamp hours per centimeter squared would be in the range required for a power cell, but to optimize for energy density, we're targeting a capacity loading in the range of approximately 5 milliamp hours per centimeter squared. This goal requires addressing several technical challenges, including coating thicker cathode electrodes while maintaining quality, calendering the cathodes to the necessary thickness, optimizing cathode microstructure, and ensuring good catalyte interface with active material. Our second goal is to improve the efficiency of our cell packaging. While the active materials of the battery set a ceiling on how energy dense a battery can be, the ratio between active materials and inactive materials, the packaging efficiency, determines the final energy density. So we're targeting improvements on that front this year on our path to commercialization. Our third goal for 2023 as we move from prototypes to commercial products is to improve the quality and consistency of materials and processes. Some core drivers of quality and consistency in our manufacturing process include increased precision through automation and control, quality of input materials, and particle reduction across our process flow. We plan to implement such process improvements and controls which we believe will ultimately lead to higher reliability. Finally, and most exciting, our fourth goal is to deploy a new fast separator production process that's significantly faster than our current baseline. And in its initial implementation, we expect it can support up to three times more throughput using similar equipment to our current process. When this new process comes online, we expect our consolidated QH0 line will be ready to begin initial lower volume production. We believe that deploying this fast process in 2023 is an important step on our path to mass production in the coming years. With a focus on these four key goals, we aim to make substantial progress in 2023 toward our ultimate target of product commercialization. On that note, I'd like to say a word about our strategic outlook. In our letter to shareholders last year, we laid out four key premises that underlie our commercial opportunity. Battery electric power cranes represent the future of transportation. Second, anode-free lithium metal batteries have the potential to deliver compelling improvements over current lithium ion batteries. Third, we can scale up our cells to many layers. And fourth, we can mass manufacture our cells. We continue to believe that the first two points are well established, and our work in 2022 was focused on the latter two points. Beginning shipments of 24-layer A0 cells demonstrated that it's possible to scale up our cell layer count to the multi-amp hour scale, a range we believe is relevant for a variety of applications. By hitting our weekly film starts goal and taking delivery of equipment for our consolidated QS serial line, we made progress towards our scale-up goals. Of course, as I mentioned earlier, much work remains to be done. However, our results over the past two years have demonstrated that when difficult problems need solving, our team consistently rises to the occasion. In the months and years ahead, new and difficult problems are sure to arise. When that happens, we're confident that we'll tackle these new challenges in the same way we solved the previous ones, with teamwork, stubborn determination, and grit. Thank you for your continued support, and we look forward to sharing more of our progress over the year ahead. With that, I'll hand things over to Kevin.