QuantumScape Corporation

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

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 the joint scale of D. 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 QSC5 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 PowerCore the right under the licensing agreement to produce up to an additional five gigawatt hours of QS cells annually, including for customers outside the Volkswagen Group for a total of up to 85 gigawatt hours. Powerco has also secured the future right to license certain advanced QS technology beyond our first-generation QSC5 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 PowerCore. 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 our first of our annual goals. Our next generation COBRA 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 QSC5 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. But 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, Siva. Capital expenditures in the second quarter were 8.3 million. Q2 CapEx primarily supported facilities and equipment purchases as we prepare for higher volume QSC5B1 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 gap 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 Power Code 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 8K with the redacted amendments.