QuantumScape Corporation

Good day and welcome to QuantumScape's third quarter 2026 earnings conference call. Sam Kamara, QuantumScape's senior director, investor relations. You may begin your conference.

Thank you, operator. Good afternoon and thank you to everyone for joining QuantumScape's third quarter 2026 earnings call. To supplement today's discussion, Please go to our investor relations 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 QuantumScape CEO, Dr. Silva Sivaram, and our Chief Accounting Officer, Agnes Tan. Our Chief Financial Officer, Kevin Hettrich is recovering from a planned medical procedure and Agnes will cover the financial portion of today's call. With that, I'd like to turn the call over to Sivaram.

Thank you, Sam. We look forward to having Kevin back soon and we wish him a speedy recovery. Let me start with the big news on cell manufacturing. In February of this year, We inaugurated the Eagle Line, and it has already become the workhorse of our customer engagement, allowing an increased pace of customer sampling, which is flowing into customer billings. Our progress on demonstrating scalable production has given us the confidence to take the next step for production scale-up beyond the design capacity of the Eagle Line. Today, we announced a 100 megawatt-hour mass production line with output aimed at meeting the rapidly emerging opportunities for our QSDC and QSAS business verticals. In addition, we announced a QS ecosystem partnership with Mundbauer Group to provide cell assembly equipment for this planned line. Engineering work on higher throughput processes and equipment is already underway, and start-up production for this new line is targeted for 2028. With Murata, Corning and Mohlbauer, we have now announced partnerships with global players along the entire production flow, representing an end-to-end solution for mass production of our technology as we work towards gigawatt-hour scale production. Next, I will provide an update on our three business verticals. starting with QSDC. On October 8th, we launched the QS Power Block for AI data centers in conjunction with the Open Compute Project Global Summit. The QS Power Block is an in-rack energy storage reference design that enables AI data center architects to harness the improved energy density, high power capability, and especially the improved safety profile of the QSC5 cell. In testing, the QS PowerBlock demonstrated four times the power density and five times longer run time than the reference specification from OCP. This is a clear demonstration of the step change performance improvement provided by QS technology and the value we can offer AI data center customers. Another important advantage of our ceramic solid state separator is its safety profile. In particular, its thermal stability. Conventional lithium-ion batteries, including LFP batteries, are not thermally stable above approximately 180 degrees Celsius, leading to the risk of catastrophic thermal runaway and making insurance and regulatory approval more onerous. which slows down deployment of critical AI infrastructure. In contrast, QS solid-state batteries have been shown to be thermally stable well over 300 degrees Celsius. And we recently validated this result in customer testing as well as with third-party lab testing. Next, an update on our automotive vertical, QS EV. Engagement on automotive cell development continues to be robust across our global automotive customers. In Q3, we recorded our first customer buildings from Honda agreement announced in June. This agreement encompasses joint development work to integrate our solid-state platform into Honda's technology roadmap. In addition, we have signed an agreement with a new customer to further advance automotive commercialization. This agreement is with a leading global player in mobility manufacturing whose applications and requirements are aligned with our automotive customers. We are aligning our statements of work with Volkswagen Power Co. with the goal of bringing them on to our long-term technology platform that goes beyond QSC5 and includes other applications. Our aim is to bring all of our automotive customers onto a common technology platform. On November 11th, we will announce more details on our next-generation technology platform and collaboration model with automotive customers at our third annual solid-state battery symposium in Kyoto, Japan. Next, an update on our QSAS business vertical. QSAS is engaged with customers across many advanced applications, defense, aerospace, medical devices, consumer electronics, and more. We believe this diversity of applications offers an attractive opportunity set for our QSC5 platform with a total addressable market for QSAS of up to $75 billion by 2030. We have shipped QSC5 samples to customers in the defense, aviation, and telecommunication sectors. And we recorded our first customer billing from QSAS this quarter. One important point of feedback from customers in defense is that supply chain vulnerabilities are not just a theoretical concern. They are already seeing restrictions put in place by foreign governments which limit their ability to procure cutting-edge batteries to power their advanced defense systems. This is a point of differentiation for QS. In addition to advantages in performance and safety, our cells are built in America and use supply chains that were designed from the beginning to avoid critical dependencies on Chinese suppliers of equipment or materials such as graphite. Finally, with Q3 behind us, I'd like to take a look back at our execution so far on our four key goals for 2026. These four goals were all focused on one strategic objective, taking our solid-state battery technology and turning it into products across multiple verticals. Our execution towards our goals has been strong. Our first key goal for 2026 is to demonstrate scalable production on the Eagle line. Eagle line is fully operational and is producing increased volumes of QSC5 cells for our customers. This has allowed us to move to the next stage of scale up with the announcement today of our 100 megawatt hour mass production line and ecosystem partnership with the Mohlbauer Group. Our second key goal for 2026 is to advance automotive commercialization. So far this year, we have announced our second named automotive partnership with Honda. We continue our engagement automotive development with Volkswagen Powerco. And we have signed new agreements and expanding existing relationships with global players in automotive and mobility. Our third key goal for 2026 is to enter new high value markets. And we are seeing strong interest in both our QSDC and QSAS verticals. With the QS power block, QSBC is addressing the need for high performance safer in-rack energy storage for advanced AI data center designs. With QSAS, we are seeing broad interest across advanced applications including defense, aviation and telecommunications and we have already begun generating customer buildings from QSC5 sample shipment. Finally, in 2026, we promise to go beyond QSC5 with an update on our technology roadmap, and we are pleased to announce that this will take place in conjunction with our third annual solid-state batteries symposium on November 11 in Kyoto, Japan. We are proud of the progress we have made so far in 2026, and while there is much work left to do, the whole team is focused on our mission to revolutionize energy storage. We look forward to sharing more updates soon.