Q2 2026 QuantumScape Corp Earnings Call

July 22, 2026

Speaker #1: Thank you for standing by and welcome to QuantumScape's second quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

Operator: Thank you for standing by, and welcome to QuantumScape's Q2 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Sanjiv Kumar, QuantumScape's Senior Director in Investor Relations. You may begin, sir.

Operator: Thank you for standing by, and welcome to QuantumScape's Q2 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Sanjiv Kumar, QuantumScape's Senior Director in Investor Relations. You may begin, sir.

Speaker #1: To ask a question during this session, you'll need to press *11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press *11 again.

Speaker #1: As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Sam Kumar, QuantumScape's Senior Director of Investor Relations.

Speaker #1: You may begin, sir.

Speaker #2: Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's second 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.

Sanjiv Kumar: Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's Q2 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 updates. Forward-looking statements generally relate to future events, future technology progress, or future financial 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.

Speaker #2: 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.

Speaker #2: 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 figures are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

Speaker #2: 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.

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

Speaker #2: 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.

Speaker #2: With that, I'd like to turn the call over to Siva.

Speaker #3: Thank you, Sam. I'd like to start by discussing our automotive commercialization progress. This quarter, we announced a partnership with Honda. This is a multi-year agreement aimed at advancing our solid-state lithium-metal battery technology for automotive and other applications in the Honda product portfolio.

Siva Sivaram: Thank you, Sayab. I'd like to start by discussing our automotive commercialization progress. This quarter, we announced a partnership with Honda. This is a multi-year agreement aimed at advancing our solid-state lithium metal battery technology for automotive and other applications in the Honda product portfolio. Honda is renowned for their engineering excellence and product quality and has made significant investments in scaling up solid-state battery manufacturing capability. This partnership results from one of the most rigorous assessments of our technology to date. Our ceramic separator and anode-free lithium metal architecture enables QS to provide solutions to unlock the full potential of solid-state batteries. With Honda's diverse product portfolio, this collaboration allows us an additional pathway to expand into new high-value markets.

Siva Sivaram: Thank you, Sanjiv. I'd like to start by discussing our automotive commercialization progress. This quarter, we announced a partnership with Honda. This is a multi-year agreement aimed at advancing our solid-state lithium metal battery technology for automotive and other applications in the Honda product portfolio. Honda is renowned for their engineering excellence and product quality and has made significant investments in scaling up solid-state battery manufacturing capability. This partnership results from one of the most rigorous assessments of our technology to-date. Our ceramic separator and anode-free lithium metal architecture enables QS to provide solutions to unlock the full potential of solid-state batteries. With Honda's diverse product portfolio, this collaboration allows us an additional pathway to expand into new high-value markets.

Speaker #3: Honda is renowned for their engineering excellence and product quality, and has made significant investments in scaling up solid-state battery manufacturing capability. This partnership results from one of the most rigorous assessments of our technology to date.

Speaker #3: Our ceramic separator and anode-free lithium-metal architecture enables QS to provide solutions to unlock the full potential of solid-state batteries. With Honda's diverse product portfolio, this collaboration allows us an additional pathway to expand into new, high-value markets.

Speaker #3: We recently updated our ongoing collaboration and licensing arrangement with Volkswagen Powerco, with a set of milestones and payments focused on automotive cell development, larger-format cells, and our future technology roadmap.

Siva Sivaram: We recently updated our ongoing collaboration and licensing arrangement with Volkswagen PowerCo with a set of milestones and payments Focused on automotive cell development, larger format cells, and our future technology roadmap. We are also working with two other top 10 automotive OEM customers under existing joint development agreements. We continue to strengthen our relationships with automakers in North America, Europe, and Japan, and on this front, we have shipped cells to an additional automotive OEM customer. We also see broad-based interest in our technology across a variety of applications beyond electric vehicles, including AI data centers and other advanced applications such as aerospace and defense. We believe that all these end markets can be served by our fundamental technology stack, but each customer can benefit from an individually tailored go-to-market approach.

Speaker #3: We are also working with two other top-10 automotive OEM customers under existing joint development agreements. We continue to strengthen our relationships with automakers in North America, Europe, and Japan, and on this front, we have shipped cells to an additional automotive OEM customer.

Speaker #3: We also see broad-based interest in our technology across a variety of applications beyond electric vehicles, including AI data centers and other advanced applications such as aerospace and defense.

Speaker #3: We believe that all these end markets can be served by our fundamental technology stack, but each customer can benefit from an individually tailored go-to-market approach.

Speaker #3: In order to serve our diverse and growing customer base, we are establishing three business verticals: QS EV for electric vehicles, QS DC for AI data centers, and QS AS for advanced solutions for applications including aerospace and defense.

Siva Sivaram: In order to serve our diverse and growing customer base, we are establishing three business verticals: QSEV for electric vehicles, QSDC for AI data centers, and QSAS for advanced solutions for applications including aerospace and defense. QSEV is working with auto OEMs around the world, including Volkswagen and Honda. QSDC is engaged with ODMs to design solutions based on QSE-5 technology for the fast-moving AI data center market. QSAS has shipped QSE-5 cells to a major American defense prime and is engaged with global players across the aerospace and defense industry. Next, an update on the Eagle Line, our highly automated pilot cell production line in San Jose, California. The Eagle Line serves several purposes.

Speaker #3: QS EV is working with auto OEMs around the world, including Volkswagen and Honda. QS DC is engaged with ODMs to design solutions based on QSC5 technology for the fast-moving AI data center market, and QS AS has shipped QSC5 cells to a major American defense prime and is engaged with global players across the aerospace and defense industries.

Speaker #3: Next, an update on the Eagle line, our highly automated pilot cell production line in San Jose, California. The Eagle line serves several purposes: greater cell volumes allow us to meet customer demand for samples, higher throughput accelerates the process development cycle, and automated equipment serves as a proving ground for scaling up production.

Siva Sivaram: Greater cell volumes allow us to meet customer demand for samples, higher throughput accelerates the process development cycle. Automated equipment serves as a proving ground for scaling up production. Demonstrating scalable production of a unique technology on a first-of-a-kind automated line is a significant challenge. As such, it is one of our four key annual goals. Applying our systematic, methodical, and iterative approach, we have made significant operational progress with the Eagle Line. Core tools are showing uptime greater than 90%, key metrics of productivity are hitting our targets. We are currently ramping sample volumes and shipping cells to customers. As we continue to improve process stability and control, we aim to further double cell output in H2 2026 and anticipate customer sample shipments accelerating across all three verticals.

Speaker #3: Demonstrating scalable production of a unique technology on a first-of-a-kind automated line is a significant challenge, and, as such, it is one of our four key annual goals.

Speaker #3: Applying our systematic methodical and iterative approach, we have made significant operational progress with the Eagle line. Core tools are showing uptime greater than 90%, key metrics of productivity are hitting our targets, and we are currently ramping sample volumes and shipping cells to customers.

Speaker #3: As we continue to improve process stability and control, we aim to further double cell output in the second half of 2026, and anticipate customer sample shipments accelerating across all three verticals.

Speaker #3: We are orchestrating a network of partners within the QS technology ecosystem with the aim of scaling up cell production. As part of this effort, we are working closely with established battery equipment vendors to lay the groundwork for future factories.

Siva Sivaram: We are orchestrating a network of partners within the QS technology ecosystem with the aim of scaling up cell production. As part of this effort, we are working closely with established battery equipment vendors to lay the groundwork for future factories. We also continue to collaborate with our ecosystem partners at Murata Manufacturing and Corning, working towards high-volume ceramic separator production using our Cobra process. Next, two updates on our technology. First, we have received consistent customer feedback that in addition to the combination of energy density and power capability, the safety profile of our technology is highly valued. Competing next-generation approaches, such as silicon or lithium metal anodes with liquid electrolytes, can pose serious safety hazards. In contrast, our proprietary ceramic separator is non-flammable and non-combustible, which enables an improved safety profile relative to lithium-ion cells.

Speaker #3: We also continue to collaborate with our ecosystem partners at Murata Manufacturing and Corning, working towards high-volume ceramic separator production using our COBRA process. Next, two updates on our technology.

Speaker #3: First, we have received consistent customer feedback that, in addition to the combination of energy density and power capability, the safety profile of our technology is highly valued.

Speaker #3: Competing next-generation approaches, such as silicon or lithium-metal anodes with liquid electrolytes, can pose serious safety hazards. In contrast, our proprietary ceramic separator is non-flammable and non-combustible, which enables an improved safety profile relative to lithium-ion cells.

Speaker #3: Thanks to the increased cell output from the Eagle line, we are able to conduct larger-scale safety testing across a broad range of commercially relevant tests, including nail penetration, external short circuit, and thermal stability testing up to 300 degrees Celsius, whereas conventional lithium-ion testing stops at 200 degrees.

Siva Sivaram: Thanks to the increased cell output from the Eagle Line, we are able to conduct larger scale safety testing across a broad range of commercially relevant tests, including nail penetration, external short circuit, and thermal stability testing up to 300 degrees Celsius, whereas conventional lithium-ion testing stops at 200 degrees. We are pleased to report that larger scale testing continues to show that QSE-5 is a significantly safer cell design compared to both conventional and next generation lithium-ion cells. We have also seen customer interest for our technology in cell form factors that are larger than the QSE-5. One benefit of larger format cells is improved packing efficiency, which can result in higher cell level energy density.

Speaker #3: We are pleased to report that larger-scale testing continues to show that QSC5 is a significantly safer cell design compared to both conventional and next-generation lithium-ion cells.

Speaker #3: We have also seen customer interest for our technology in cell form factors that are larger than the QSC5. One benefit of larger-format cells is improved packing efficiency, which can result in higher cell-level energy density.

Speaker #3: In response to this customer interest, we have demonstrated that our COBRA process can produce larger-area separators for higher-capacity cell designs, which shows the flexibility and scalability of our ceramic separator technology to meet customer requirements.

Siva Sivaram: In response to this customer interest, we have demonstrated that our Cobra process can produce larger area separators for higher capacity cell design, which shows the flexibility and scalability of our ceramic separator technology to meet customer requirements. Lastly, I want to take a step back and look at the big picture. QS was founded with the mission to revolutionize energy storage. Today, it is becoming clear just how consequential that mission is. Transportation, AI, and defense are simultaneously undergoing fundamental transformations. Electric vehicles are reshaping the global automotive market. Drones and unmanned systems are rewriting the rules of defense strategy. AI is unlocking new capabilities for every business and person on the planet. These extraordinary developments all have one thing in common. They all need better batteries. We are positioning our organization to take advantage of these technology transformations.

Speaker #3: Lastly, I want to take a step back and look at the big picture. QS was founded with the mission to revolutionize energy storage. Today, it's becoming clear just how consequential that mission is.

Speaker #3: Transportation, AI, and defense are simultaneously undergoing fundamental transformations. Electric vehicles are reshaping the global automotive market, drones and unmanned systems are rewriting the rules of defense strategy, and AI is unlocking new capabilities for every business and person on the planet.

Speaker #3: These extraordinary developments all have one thing in common: they all need better batteries. We are positioning our organization to take advantage of these technology transformations.

Speaker #3: QSDC is working to capitalize on exciting, high-value opportunities in the AI data center market, and QSAS is engaging with customers in high-value aerospace and defense applications.

Siva Sivaram: QSDC is working to capitalize on exciting, high-value opportunities in the AI data center market. QSAS is engaging in customers in high-value aerospace and defense applications. With QSEV, we are advancing automotive commercialization with our four top 10 OEM customers, including the newly announced Honda partnership. The Eagle Line is ramping up to enable increased customer shipments in H2, and we are investing in future technology roadmap with larger format cells and more in the pipeline. There is much work still to do, but our team has the talent and tenacity to overcome challenges as we industrialize our technology to make the most of these transformational opportunities. Thank you for your support, and we look forward to sharing more updates in the months ahead. With that, I will turn things over to Kevin for a word on our financial outlook.

Speaker #3: With QSEV, we are advancing automotive commercialization with our four top-10 OEM customers, including the newly announced Honda partnership. The Eagle line is ramping up to enable increased customer shipments in the second half of the year, and we are investing in future technology roadmaps, with larger-format cells and more in the pipeline.

Speaker #3: There is much work still to do, but our team has the talent and tenacity to overcome challenges as we industrialize our technology to make the most of these transformational opportunities.

Speaker #3: Thank you for your support, and we look forward to sharing more updates in the months ahead. With that, I'll turn things over to Kevin for a word on our financial outlook.

Speaker #2: Thank you, Siva. Q2 operating expenses and GAAP net loss were $106.1 million and $98.2 million, respectively. Adjusted EBITDA loss was $64.2 million in Q2, in line with expectations.

Kevin Hettrich: Thank you, Siva. GAAP operating expenses and GAAP net loss in Q2 were $106.1 million and $98.2 million, respectively. Adjusted EBITDA loss was $64.2 million in Q2, in line with expectations. For full year 2026, we reiterate our adjusted EBITDA loss guidance of between $250 million and $275 million. A table reconciling GAAP net loss and adjusted EBITDA is available in the financial statement at the end of our shareholder letter. Capital expenditures in Q2 were $4.6 million. Q2 CapEx was primarily composed of investment into our technology roadmap and associated facility spend. For full year 2026, we lower our guidance for CapEx to be between $27 million and $37 million, reflecting capital discipline and cost savings on specific capital projects. We set a public goal for customer billings in 2026 to exceed customer billings in 2025. As of today, we have achieved this goal.

Speaker #2: For the full year 2026, we reiterate our adjusted EBITDA loss guidance of between $250 million and $275 million. A table reconciling GAAP net loss and adjusted EBITDA is available in the financial statements at the end of our shareholder letter.

Speaker #2: Capital expenditures in the second quarter were $4.6 million. Q2 capex was primarily composed of investment into our technology roadmap and associated facility spend. For full year 2026, we lower our guidance for capex to be between $27 million and $37 million, due to savings on specific capital projects.

Speaker #2: We set a public goal for customer billings in 2026 to exceed customer billings in 2025. As of today, we've achieved this goal. Customer billings in Q2 were $10.8 million.

Kevin Hettrich: Customer billings in Q2 were $10.8 million. Total customer billings through Q2 2026 are $21.8 million, exceeding fiscal year 2025 customer billings of $19.5 million. Customer billings as a metric represents the total value of all invoices issued by QuantumScape to our customers and partners in the period, regardless of accounting treatment. As a reminder, customer billings may vary from quarter to quarter due to fluctuations in activity as we progress through various phases of engagement. This operational metric is not a substitute for revenue under US GAAP. We ended Q2 with $859 million in liquidity and will remain prudent with our strong balance sheet going forward. 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.

Speaker #2: Total customer billings through Q2 2026 are $21.8 million, exceeding fiscal year 2025 customer billings of $19.5 million. Customer billings as a metric represent the total value of all invoices issued by QuantumScape to our customers and partners in the period, regardless of accounting treatment.

Speaker #2: As a reminder, customer billings may vary from quarter to quarter due to fluctuations in activity as we progress through various phases of engagement. This operational metric is not a substitute for revenue under U.S. GAAP.

Speaker #2: We ended Q2 with $859 million in liquidity and will remain prudent with our strong balance sheet going forward. As always, we encourage investors to read more about our financial information, business outlook, and risk factors in our quarterly and annual SEC filings on our investor relations website.

Speaker #3: Thanks, Kevin. We will begin today’s Q&A portion with a few questions we received from investors that I believe will interest them. Siva, we are now halfway through 2026.

Sanjiv Kumar: Thanks, Kevin. We will begin today's Q&A portion with a few questions we have received from investors or that I believe will interest investors. Siva, we are now halfway through 2026. What proof points should investors evaluate to know if QuantumScape is tracking to our annual goals?

Speaker #3: What proof points should investors evaluate to know if QuantumScape is tracking to our annual goals?

Siva Sivaram: Sam, goal number one is to demonstrate scalable production with the Eagle Line. Taking a unique technology on a highly automated process from the ceramic separator to the unit cell to the fully assembled QSE-5 that meets customer requirements is a significant challenge. We are making strong operational progress and remain on track. Goal number two is to advance automotive commercialization with QSEV. We are working with four of the top 10 global automakers, including our new deal with Honda. Adding another paying customer is a big step forward in our commercialization efforts. We also updated the PowerCo collaboration and licensing arrangement with milestones for automotive cell development, and we shipped cells to an additional automotive OEM in this past quarter. Goal three is to enter into new high-value markets. We are very excited about the progress we are making in these new business verticals.

Speaker #4: Goal number one is to demonstrate scalable production with the Eagle line. Taking a unique technology on a highly automated process—from the ceramic separator to the unit cell to the fully assembled QSC5 that meets customer requirements—is a significant challenge.

Speaker #4: We are making strong operational progress and remain on track. Goal number two is to advance automotive commercialization with QSEV. We are working with four of the top 10 global automakers, including our new deal with Honda.

Speaker #4: Adding another paying customer is a big step forward in our commercialization efforts. We also updated the PowerCo collaboration and licensing arrangement, with milestones for automotive cell development, and we shipped cells to an additional automotive OEM in this past quarter.

Speaker #4: Goal three is to enter into new high-value markets. We are very excited about the progress we are making in these new business verticals. We have appointed talented leaders to run QSDC and QSAS.

Kevin Hettrich: We have appointed talented leaders to run QSDC and QSAS. QSDC is engaging with OEMs and data center architects to provide solutions for this fast-moving market. QSAS has shipped QSE-5 cells to a major American defense prime, and we are engaged with global customers in aerospace, defense, and other advanced applications. Goal four is to go beyond QSE-5 with our future technology roadmap. This quarter, we showed larger format separators from Cobra, which enables higher energy density cells. We have also shown new safety data this quarter with thermal stability, external short circuit, and nail penetration results that are particularly outstanding compared to competitors.

Speaker #4: QSDC is engaging with ODMs and data center architects to provide solutions for this fast-moving market. QSAS has shipped QSC5 cells to a major American defense prime, and we are engaged with global customers in aerospace, defense, and other advanced applications.

Speaker #4: Goal four is to go beyond QSC5 with our future technology roadmap. This quarter, we showed larger-format separators from COBRA, which enable higher-energy-density cells.

Speaker #4: We have also shown new safety data this quarter, with thermal stability, external short circuit, and nail penetration results that are particularly outstanding compared to competitors.

Speaker #4: We are committed to sharing more on our technology roadmap later this year.

Siva Sivaram: We are committed to sharing more on our technology roadmap later this year.

Speaker #2: We're making the progress Siva discussed toward our technical and commercial goals while remaining disciplined stewards of capital. We have reiterated adjusted EBITDA guidance, and total customer billings for 2026 are already higher than last year.

Kevin Hettrich: We're making the progress Siva discussed toward our technical and commercial goals while remaining disciplined stewards of capital. We have reiterated adjusted EBITDA guidance and total customer billings for 2026 are already higher than last year.

Sanjiv Kumar: Siva, we are now organized into three business verticals. What is our approach to serving automotive and non-automotive markets?

Speaker #3: Siva, we are now organized into three business verticals. What is our approach to serving automotive and non-automotive markets?

Speaker #4: We see broad-based demand for better batteries across the board—AI data centers, aerospace, consumer electronics, medical devices, defense, and many other applications. We believe they are all capable of being served by the QS technology platform.

Siva Sivaram: We see broad-based demand for better batteries across the board, AI data centers, aerospace, consumer electronics, medical devices, defense, and many other applications. We believe they're all capable of being served by the QS technology platform. The benefits of energy density, power, safety, US supply chain, and workforce all resonate with our customers. For the QS EV vertical, our automotive customers all have development pilot lines for batteries and high-volume manufacturing capabilities. For QS DC and QS AS customers, this may not be the case. They are fast-moving, the number of customers is larger, go-to-market has different channels, we may involve ODMs, and product integration looks different with more opportunities for value creation. These new verticals increase the size of the market, strengthen the fundamental technology platform, and benefit the QS ecosystem, which adds value to our customers across all verticals.

Speaker #4: The benefits of energy density, power, safety, U.S. supply chain, and workforce all resonate with our customers. For the QSEV vertical, our automotive customers all have development pilot lines for batteries and high-volume manufacturing capabilities.

Speaker #4: For QSDC and QSAS customers, this may not be the case. They are fast-moving, the number of customers is larger, go-to-market has different channels, we may involve ODMs, and product integration looks different with more opportunities for value creation.

Speaker #4: These new verticals increase the size of the market, strengthen the fundamental technology platform, and benefit the QS ecosystem, which adds value to our customers across all verticals.

Speaker #3: Siva, what should investors take away from the recent updates to the VW and PowerCo relationship, and how do they reflect the progress being made towards commercialization?

Sanjiv Kumar: Siva, what should investors take away from the recent updates to the VW and PowerCo relationship, and how do they reflect the progress being made towards commercialization?

Speaker #4: Cam, the relationship with VW PowerCo continues to be strong, and the two teams are working closely together on site here in San Jose. The overall objectives of the collaboration are unchanged.

Siva Sivaram: Sam, the relationship with VW PowerCo continues to be strong, and the two teams are working closely together on-site here in San Jose. The overall objectives of the collaborations are unchanged. Industrialize the QS technology and transfer the technology to Volkswagen PowerCo for automotive commercialization. Over the past two years, we have continued to update and revise the scope of work as we progress this relationship. The updated scope of work includes milestones related to larger form factor cells, as well as technology elements from QuantumScape's advanced product roadmap. We look forward to sharing more on that soon.

Speaker #4: Industrialize the QS technology and transfer the technology to Volkswagen PowerCo for automotive commercialization. Over the past two years, we have continued to update and revise the scope of work as we progress this relationship.

Speaker #4: The updated scope of work includes milestones related to larger form factor cells, as well as technology elements from QuantumScape's advanced product roadmap, and we look forward to sharing more on that soon.

Speaker #2: From a financial perspective, customer billings under the 2025 VW PowerCo collaboration agreement represent a cost share for QS expenses incurred under the agreed scope of work.

Kevin Hettrich: From a financial perspective, customer billings under the 2025 VW PowerCo collaboration agreement represent a cost share for QS expenses incurred under the agreed scope of work. Under the new scope of work, we've tied payments to deliverables aligned to our product roadmap. Additionally, we eliminated MotoE related milestones given that the organizers put that race series on hiatus. As a result, even though the total possible payments under the agreement have reduced from approximately $131 million to approximately $75 million, we now project significantly reduced expenses for the project. We forecast a net neutral financial impact in terms of cash when compared to the 2025 scope of work. I'd refer investors to the 8-K on file for more information.

Speaker #2: Under the new scope of work, we've tied payments to deliverables aligned to our product roadmap. Additionally, we eliminated MOTOE-related milestones given that the organizers put that race series on hiatus.

Speaker #2: As a result, even though the total possible payments under the agreement have reduced from approximately $131 million to approximately $75 million, we now project significantly reduced expenses for the project.

Speaker #2: We forecast a net neutral financial impact in terms of cash when compared to the 2025 scope of work. I'd refer investors to the 8-K on file for more information.

Speaker #3: Okay, thanks so much, Kevin. We're now ready to begin the live portion of today's call. Operator, please open up the line for questions.

Sanjiv Kumar: Okay. Thanks so much, Kevin. We are now ready to begin the live portion of today's call. Operator, please open up the line for questions.

Speaker #5: Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press *11 on your telephone. Our first question for today comes from the line of Gabriel Gonzalez from UBS.

Operator: Certainly. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. Our first question for today comes from the line of Gabriel Gonzales from UBS. Your question please.

Speaker #5: Your question, please.

Speaker #6: Hey guys, thanks for taking my question. So firstly, on the updated PowerCo agreement, the updated milestone framework appears to have shifted away from execution-oriented targets, like battery cell delivery and validation over the next two years, towards cell development and technology-related objectives.

Gabriel Gonzales: Hey, guys. Thanks for taking my question. Firstly, on the updated PowerCo agreement, the updated milestone framework appears to have shifted away from execution-oriented targets like battery cell delivery and validation over the next 2 years towards cell development and technology-related objectives. Can you just help us understand the reasoning behind that change? Should we view the absence of the earlier milestones as a change in expectations regarding their timing or achievability?

Speaker #6: So can you just help us understand the reasoning behind that change? And should we view the absence of the earlier milestones as a change in expectations regarding their timing or achievability?

Siva Sivaram: The Volkswagen PowerCo agreements, we update them every year. We have done that 3 years in a row. As the relationship progresses, we update it based on the milestones yet to come, and we have done that consistently. The relationship is very strong, and our objectives remain the same. This reflects that we will be paid based on the milestones that we both have agreed that we need to achieve, which are aligned with our technology roadmap. For instance, the larger format cell, the future technology milestones that we need to get, et cetera. There is not anything philosophically different about the objectives of the joint program.

Speaker #4: We update the Volkswagen PowerCo agreements every year. We have done that three years in a row. As the relationship progresses, we update them based on the milestones yet to come.

Speaker #4: And we have done that consistently. The relationship is very strong, and our objectives remain the same. This reflects that we will be paid based on the milestones that we have both agreed we need to achieve, which are aligned with our technology roadmap.

Speaker #4: For instance, the larger-format cell, the future technology milestones that we need to get, etc.—there isn’t anything philosophically different about the objectives of the joint program.

Speaker #6: Got it. Okay. Thank you for that color. And Kevin, you mentioned a neutral impact on cash flow—the lower expenses for the project offsetting the lower cash inflow—but is there any impact to the $130 million royalty prepayment from PowerCo?

Gabriel Gonzales: Got it. Okay. Thank you for that color. Kevin, you mentioned a neutral impact cash flow, the lower expenses for the project offsetting the lower cash inflow. But is there any impact to the $130 million royalty prepayment from PowerCo? If not, what's the progress update there, and should we expect those funds to come in this year or next year?

Speaker #6: And if not, what's the progress update there, and should we expect those funds to come in this year or next year?

Speaker #2: Great, great question, Gabe. You're correct that the $130 million prepay is unchanged here and is released by technical milestones and alignment on the form factor.

Kevin Hettrich: Great question, Gabe. You're correct. The $130 million prepay is unchanged here and is released by technical milestones and alignment on the form factor. There, as we've laid out in the letter, we've made nice progress as we've outlined with the Eagle Line

Speaker #2: And there, as we've laid out in the letter, we've made nice progress, as we've outlined, with the ego line, and also with the demonstration of those larger separators coming off of our COBRA line.

Siva Sivaram: Also with the demonstration of those larger separators coming off of our Cobra Line.

Speaker #6: Got it. Okay. Thank you. I'll pass it on.

Gabriel Gonzales: Got it. Okay. Thank you. I'll pass it on.

Speaker #2: Thanks, Gabe.

Siva Sivaram: Thanks, Gabe.

Speaker #5: Thank you. And our next question comes from the line of Ethan McKelly from TD Cowen. Your question, please.

Operator: Thank you. Our next question comes from the line of Etai McKelvey from TD Cowen. Your question please.

Speaker #7: Hey, great. This is Justin Unfree. How's everyone?

[Analyst] (TD Cowen): Hey, great. This is Justin on for Etai. How's everyone?

Speaker #2: Hi, Justin.

Siva Sivaram: Hi, Justin.

Speaker #7: Hey, so a super quick question. You guys highlighted QSAs, the shipments of the QSE-5 cells in the quarter. Can you help us understand some of the nuance around that shipment?

[Analyst] (TD Cowen): Hey. A super quick question. You guys highlighted QSAS, the shipments of the QSE-5 cells in the quarter. Can you help us understand maybe some of the nuance around that shipment? Was it just natural ramp cadence associated with the Eagle Line? Is there any kind of deferral of milestones that might have freed up some incremental capacity that allowed those shipments? Just trying to get a better understanding of maybe how that ramp is kind of progressing on yield, line times, cycle times, and any improvements or color you can provide, at least on that AI model update for the reliability improvements that may have contributed there as well.

Speaker #7: Was it just natural ramp cadence associated with the ego line? Is there any kind of deferral of milestones that might have freed up some incremental capacity that allowed those shipments?

Speaker #7: Just trying to get a better understanding, I guess, of maybe how that ramp is progressing on yield, line time, cycle times, and any improvements—or color you can provide—at least on that AI model update for the reliability improvements that may have contributed there as well.

Speaker #2: Justin, great question.

Siva Sivaram: Justin, great question. The answer is yes. The Eagle Line obviously is improving in productivity. As you would expect, taking a brand-new technology, a very unique technology, into a new highly automated line and getting the product out to meet customer demands is a difficult challenge, and we've been doing very good progress on the Eagle Line through the last three months since we installed the line in February. There are three major benefits out of this. A, clearly it gives us more samples to ship to customers. B, the higher volume allows us to learn rapidly. Three, the Eagle Line itself serves as the basis for the technology transfer for the higher volume lines later on with our customers.

Speaker #4: So the answer is yes. The Ego line, obviously, is improving in productivity. As you would expect, taking a brand new technology—a very unique technology—into a new, highly automated line and getting the product out to meet customer demands is a difficult challenge.

Speaker #4: And we've been doing very good progress on the ego line through the last three months since we installed the line in February. And this allows us the increased volume allows us to there are three major benefits out of this.

Speaker #4: A, clearly, it gives us more samples to ship to customers. B, the higher volume allows us to learn rapidly. And three, the Ego line itself serves as the basis for the technology transfer for the higher-volume lines later on with our customers.

Speaker #4: So this naturally allowed us to be able to ship this out of the EGO line for a customer demand in the U.S. defense price.

Siva Sivaram: This naturally allowed us to be able to ship this out of the Eagle Line for a customer demand in the US defense prime.

Speaker #7: Super helpful. And then maybe on QSDC, while we're on the topic, how far away do you envision the initial shipments of samples into that vertical?

[Analyst] (TD Cowen): Super helpful. Then maybe on QSDC while we're on the topic. How far away do you kind of envision the initial shipments of samples into that vertical? Obviously, there's been progress in the quarter. Just trying to get an understanding of maybe the timeline as to when samples start hitting them and how quickly the conversion rate might be relative to the QSAS side of the business now.

Speaker #7: Obviously, there's been progress in the quarter. I'm just trying to get an understanding of maybe the timeline as to when samples start hitting them, and how quickly the conversion rate might be relative to the AS side of the business now.

Speaker #4: Yeah, QSDC, as you all observe, is a very fast-moving business, and the demands are going up rapidly. There are significant players involved. We are working closely with data center architects and ODMs that supply to these architects.

Siva Sivaram: Yeah, QSDC, as you all observe, is a very fast-moving business, and the demands are going up rapidly, and there are significant players involved. We are working closely with data center architects and ODMs that supply to these architects. We are working closely to develop designs that can be delivered to these ODMs to integrate. It also allows us to do higher value in our integration in the product. This is all coming together very rapidly. We have a new general manager for the business. Shahar Noy is getting ramped up on this very rapidly.

Speaker #4: We are working closely to develop designs that can be delivered to these ODMs to integrate, and it also allows us to do higher value in our integration in the product.

Speaker #4: So this is all coming together very rapidly. We have a new general manager for the business. Shahar Noy is getting ramped up on this very, very rapidly.

Speaker #7: Perfect. And then, if I could sneak one final one in before jumping into the Q, more mechanic-wise: on the Q2 billings, of the $10.8, how much of that was Powerco?

[Analyst] (TD Cowen): Perfect. If I could sneak one final one in before jumping into Q, more mechanic-wise. On the Q2 billings of the $10.8, how much of that was Power? Because I guess, just trying to square up maybe the $75 in context of, I believe it was $20 as of the end of Q1. Just trying to figure out the incremental to see how much is left, at least on that milestone update that you guys provided from a payment perspective.

Speaker #7: I guess just trying to square up maybe the $75 million in context of, I believe it was $20 million as of the end of Q1. Just trying to figure out the incremental, to see how much is left, at least on that milestone update that you guys provided from a payment perspective.

Speaker #2: Yeah, thank you for the question. So, they're certainly part of the mix. We don't, as a practice, break out the billings into finer detail. I would mention that, as part of our annual goals, we have a number of customer-facing ones.

Kevin Hettrich: Yeah. Thank you for the question. They're certainly part of the mix. We don't, as practice, break out the billings into finer detail. I would mention that as part of our annual goals, we have a number of customer-facing ones. One is to advance automotive collaboration. You have the update to VW today. You have the Honda relationship. Further success there means advancing those relationships and adding more. Also the letter goes into detail with making progress in other customer segments, including the AI data center and the advanced solution spaces. The goal is to advance those relationships as well, and you get a broader and broader portfolio of customer activity across that metric.

Speaker #2: One is to advance automotive collaboration. You have the update to VW today, and you have the Honda relationship. Further success there means advancing those relationships and adding more. Also, the letter goes into detail about making progress in other customer segments, including the AI data center and the advanced solution spaces.

Speaker #2: So the goal is to advance those relationships as well. And you get a broader and broader portfolio of customer activity across that metric.

Speaker #7: Awesome. Thanks for the color. I'll jump back to you.

[Analyst] (TD Cowen): Awesome. Thanks for the color. I'll jump back at Q. Thanks.

Speaker #2: Yeah. One other brief plug on the Ego line: we did put out a video today between our COO, Luca, and his VP of Automation and Hardware, talking about the importance of the line and what it meant to bring that up.

Siva Sivaram: Yeah. One other brief plug. On the Eagle Line, we did put out a video today between our COO, Luca, and his VP of automation and hardware talking about the importance of the line and what it meant to bring that up. Also in the quarter, to the extent there's interest in the data center piece, we do have that new GM talking about the data center piece, the segment that we're targeting, and some early details on go-to-market.

Speaker #2: And also, in the quarter, to the extent there's interest in the data center piece, we do have that new GM talking about the data center piece, the segment that we're targeting, and some early details on go-to-market.

Speaker #5: Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 1-1. Our next question comes from the line of Lisa Zack from HSBC.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one. Our next question comes from the line of Laysha Zack from HSBC. Your question please.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one. Our next question comes from the line of Laisha Zaack from HSBC. Your question please.

Speaker #5: Your question, please.

Speaker #8: Hi, Siva. Hi, Kevin. Thank you so much for taking my question. I just wanted to touch a little bit on the new vertical. Do you have any plans to expand the business into other different verticals?

Laysha Zack: Hi, Siva. Hi, Kevin. Thank you so much for taking my question. I just wanted to touch a little bit on the new vertical. Do you have any plans to expand the business into other different verticals? I'm thinking about consumer and how the technology you're developing fits well into it. I'm just wondering if the new business verticals, like, data centers and aerospace and defense will be your main focus along with automotive or are you open to exploring other opportunities?

Laisha Zaack: Hi, Siva. Hi, Kevin. Thank you so much for taking my question. I just wanted to touch a little bit on the new vertical. Do you have any plans to expand the business into other different verticals? I'm thinking about consumer and how the technology you're developing fits well into it. I'm just wondering if the new business verticals, like, data centers and aerospace and defense will be your main focus along with automotive or are you open to exploring other opportunities?

Speaker #8: I'm thinking about consumers and how the technology you're developing fits well into that space, but I'm just wondering if the new business verticals, like data centers, space, and science, will be your main focus along with automotive, or are you open to exploring other opportunities?

Siva Sivaram: Laysha, good to hear from you. Thank you. Yes is the answer to that question. We have clearly separated out QSEV and we have clearly separated out QSDC, which is the data center business. The advanced solutions business explores all of the other opportunities, including aerospace, defense, medical devices, and consumer electronics, and other interesting areas. We do see substantive opportunities for the QSE technology platform in many of these, particularly the QSE-5 form factor. The existing product can be shipped into many of these products, we are actively exploring these opportunities as well.

Siva Sivaram: Laisha, good to hear from you. Thank you. Yes is the answer to that question. We have clearly separated out QSEV and we have clearly separated out QSDC, which is the data center business. The advanced solutions business explores all of the other opportunities, including aerospace, defense, medical devices, and consumer electronics, and other interesting areas. We do see substantive opportunities for the QSE technology platform in many of these, particularly the QSE-5 form factor. The existing product can be shipped into many of these products, we are actively exploring these opportunities as well.

Speaker #4: Lisha, good to hear from you. Thank you. Yes is the answer to that question. We have clearly separated out QSEV, and we have clearly separated out QSDC, which is the data center business.

Speaker #4: The Advanced Solutions business explores all of the other opportunities, including aerospace, defense, medical devices, consumer electronics, and other interesting areas. We do see substantive opportunities for the QS technology platform in many of these, particularly the QSC5 form factor.

Speaker #4: The existing product can be shipped into many of these products, so we are actively exploring these opportunities as well.

Speaker #8: Okay, thank you so much. And just another follow-up—you have noted in your remarks that AI data centers are transitioning to 800-volt DC designs that are similar to EV architectures.

Laysha Zack: Okay. Thank you so much. Just another follow-up. You have noted in the remarks that AI data centers are transitioning to 800 volt DC designs that are similar to EV architectures. Given that there's an urgent constraint or power constraint actually, that the hyperscalers are facing today, could that mean that QSE could potentially reach higher volume commercialization faster than QSEV because of this very intense or strong demand from the market which just requires more complex vehicle integration? Does that make sense?

Laisha Zaack: Okay. Thank you so much. Just another follow-up. You have noted in the remarks that AI data centers are transitioning to 800 volt DC designs that are similar to EV architectures. Given that there's an urgent constraint or power constraint actually, that the hyperscalers are facing today, could that mean that QSE could potentially reach higher volume commercialization faster than QSEV because of this very intense or strong demand from the market which just requires more complex vehicle integration? Does that make sense?

Speaker #8: So, just given that there's an urgent constraint, or power constraint actually, that the hyperscalers are facing today, could that mean that QSDC could potentially reach higher volume compensation faster than QSEV?

Speaker #8: Because of this very intense, or strong, demand from the market, which just requires more complex vehicle integration—does that make sense?

Speaker #4: Lisha, I do understand the question. The data center market has a lot of need, especially when it comes to energy and power. High-quality power delivery is one of their biggest bottlenecks.

Siva Sivaram: Laysha, I do understand the question. The fact that the data center market has a lot of need, especially from energy to power, high quality power delivery is one of their biggest bottlenecks. We, with our high energy and power density, and particularly safety, is a great fit for this market, means that there is a lot of opportunity here. This is the reason we have stood up 3 verticals so that we can put the focus on each of these verticals without sacrificing our go-to-market focus on each of these. We will be giving data center, with its 800 volt transition coming up, all the attention to make sure we capture that market as quickly as possible.

Siva Sivaram: Laisha, I do understand the question. The fact that the data center market has a lot of need, especially from energy to power, high quality power delivery is one of their biggest bottlenecks. We, with our high energy and power density, and particularly safety, is a great fit for this market, means that there is a lot of opportunity here. This is the reason we have stood up 3 verticals so that we can put the focus on each of these verticals without sacrificing our go-to-market focus on each of these. We will be giving data center, with its 800 volt transition coming up, all the attention to make sure we capture that market as quickly as possible.

Speaker #4: And we, with our high energy and power density—and particularly safety—is a great fit for this market, which means there is a lot of opportunity here.

Speaker #4: So, this is the reason we have stood up three verticals: so that we can put the focus on each of these verticals without sacrificing our go-to-market focus on each of these.

Speaker #4: We will be giving data center, with its 800-volt transition coming up, all the attention to make sure we capture that market as quickly as possible.

Kevin Hettrich: Laysha, if you recall, expanding into high-value markets is one of our 4 annual goals. Our annual operating plan includes investments into go-to-market and commercialization capability, notably in sales, product management, and engineering. The hiring is going well, and we did reiterate our adjusted EBITDA guidance on this call.

Speaker #2: And, Lisha, if you recall, expanding into high-value markets is one of our four annual goals. Our annual operating plan includes investments into go-to-market and commercialization capability.

Kevin Hettrich: Laisha, if you recall, expanding into high-value markets is one of our 4 annual goals. Our annual operating plan includes investments into go-to-market and commercialization capability, notably in sales, product management, and engineering. The hiring is going well, and we did reiterate our adjusted EBITDA guidance on this call.

Speaker #2: Notably, in sales, product management, and engineering, the hiring is going well. And we did reiterate our adjusted EBITDA guidance on this call.

Speaker #8: Okay, thank you so much. And congrats on the progress. Nice talking to you.

Laysha Zack: Okay. Thank you so much, and congrats on the progress. Nice talking to you.

Laisha Zaack: Okay. Thank you so much, and congrats on the progress. Nice talking to you.

Speaker #4: Thank you, Lisha.

Siva Sivaram: Thanks, Laysha.

Siva Sivaram: Thanks, Laisha.

Speaker #5: Thank you. And our next question comes from the line of John Sager from Evercore ISI. Your question, please.

Kevin Hettrich: Thanks, Laysha.

Kevin Hettrich: Thanks, Laisha.

Operator: Thank you. Our next question comes from the line of John Saager from Evercore ISI. Your question please.

Speaker #6: Hey, guys. How are you? Hey, John.

John Saager: Hey, guys. How are you?

Kevin Hettrich: Hey, John.

Siva Sivaram: Hey, John.

Speaker #3: I wanted to get some additional clarity on the power co-agreement. So my understanding is that under the old agreement, you had up to $130 million that would be billed through Q2 of 2027.

John Saager: My understanding is that under the old agreement, you had up to $130 million that would be billed through Q2 of 2027. Under this new agreement, it's $75 million through Q2 of 2028. If we're to say like roughly $41 million remaining through Q2 2028, is that correct? Sorry, $34 million remaining through Q2 of 2028, because you've billed around $40 million so far, I think.

Speaker #3: Under this new agreement, it's $75 million through Q2 of 2028. So if we're to say roughly $41 million remaining through Q2 '28, is that correct?

Speaker #3: Sorry, $34 million remaining through Q2 of '28? Because you billed around $40 million so far, I think.

Speaker #2: Yeah, you have the up to, correct? We haven't cleanly kind of broken out which portion of that from PowerCo is over time, but I would just reiterate that you have the basics, right?

Kevin Hettrich: Yeah. You have the up to correct. We haven't cleanly kind of broken out which portion of that from PowerCo is over time, we'll just reiterate that you have the basics right. The up to changed. The forecast expenses also went down, we see a neutral cash impact when related to the 2025 scope work. That's correct, John.

Speaker #2: The "up to" changed. The forecasted expenses also went down, and we see a neutral cash impact when related to the 2025 scope work. That's correct, John.

Speaker #3: And then on the timing for PowerCo, I think my last understanding is that they had said start of production would begin in 2029. Are you still on track there?

John Saager: On the timing for PowerCo, I think the last understanding is that they had said start of production begin in 2029. Are you still on track there? What are the next milestones that we'll kind of hear about as it relates to this partnership so that we can track your progress towards that 2029 date?

Speaker #3: And what are the next milestones that we'll kind of hear about as it relates to this partnership, so that we can track your progress towards that 2029 date?

Speaker #4: So, John, all of our work goes through the Eagle line. The Eagle line’s progress is what determines how quickly we can transfer the technology to PowerCo to take it up there.

Siva Sivaram: John, all of our work goes through the Eagle Line. The Eagle Line progress is what determines how quickly we can transfer the technology to PowerCo to take it up there. We are seeing great progress here. Eagle Line got installed and released in February. From February to now, we have integrated all the pieces of the Eagle Line, now making sure their uptime is high, the productivity is good, and now continuing to work on process stability and process control. These are the kind of things that allow us to increase the volume of output, which we plan to double in H2 of the year. That allows us the confidence to work with Volkswagen PowerCo transfer.

Speaker #4: And we are seeing great progress here. Eagle Line got installed and released in February. And from February to now, we have integrated all the pieces of the Eagle Line.

Speaker #4: And now, making sure their uptime is high and the productivity is good, and now continuing to work on process stability and process control—these are the kinds of things that allow us to increase the volume of output, which we plan to double in the second half of the year.

Speaker #4: That allows us the confidence to work with Volkswagen PowerCo to transfer.

Speaker #3: And is 2029 still the target?

John Saager: Is 2029 still the target?

Speaker #4: That is correct. We have not announced any change from our original plans.

Siva Sivaram: That is correct. We have not announced any change from our original plans.

Speaker #3: Okay. And on the two new business lines, if I could ask one more: What is the focus for those business lines this year? Are you more focused on driving customer demand and JDAs, or are you looking to sort of build out the ecosystem—meaning that the first step is, kind of, you need to sign a battery manufacturing partner?

John Saager: Okay. On the two new business lines, if I could ask one more. What is the focus for those business lines this year? Are you more focused on driving customer demand and JDAs, or are you looking to sort of build out the ecosystem, meaning that first step is kind of you need to sign a battery manufacturing partner?

Speaker #4: Yeah, John. So, these two new businesses as we are starting up, the big advantage is that they use the power of the QSC5 platform.

Siva Sivaram: Yeah. John, these two new businesses, as we are starting up, the big advantage is that they use the power of the QSE-5 platform. The QSE-5 platform, with its no compromise performance across all aspects, is the foundation on which they are built. Our immediate next focus is on go-to-market. We are reinforcing the go-to-market personnel strategies to make sure we are able to service these customers as rapidly as possible. You are right. Immediately afterwards, we should be focused on getting volumes out to them.

Speaker #4: The QSC5 platform, with its no-compromise performance across all aspects, is the foundation on which they are built. Our immediate next focus is on go-to-market.

Speaker #4: We are reinforcing the go-to-market personnel strategies to make sure we are able to service these customers as rapidly as possible. You are right. Immediately afterwards, we should be focused on getting volumes out to them.

Speaker #3: Okay. So, first step: customers. Second step: find a partner to do the actual manufacturing.

John Saager: Okay. First step, customers. Second step, find a partner to do the actual manufacturing.

Speaker #2: Yeah. And John, if you recall, in the summer 2025 amendment to the PowerCo collaboration agreement, we expanded capacity under the license to up to 85 gigawatt-hours.

Kevin Hettrich: Yeah. John, if you recall, in the summer 2025 amendment to the PowerCo collaboration agreement, we expanded capacity of that license up to 85 gigawatt-hours, that incremental 5 gigawatt-hours was permitted by VW PowerCo to go outside of the automotive market. PowerCo is certainly one channel. In the fullness of time, we are engaged with multiple different customers in that QuantumScape Advanced Solutions channel. The Eagle Line is a very powerful capability to do customer sampling, in the fullness of time, we absolutely will need to add capacity.

Speaker #2: And that incremental 5 gigawatt-hours was permitted by VW PowerCo to go outside of the automotive market. So, PowerCo is certainly one channel in the fullness of time.

Speaker #2: We are engaged with multiple different customers in that QuantumScape Advanced Solutions channel. The Eagle line is a very powerful capability to do customer sampling.

Speaker #2: But in the fullness of time, we absolutely will need to add capacity.

Speaker #3: Okay. Thanks.

John Saager: Okay, thanks.

Speaker #5: Thank you. And our next question comes from Mark Delaney at Goldman Sachs. Your question, please.

Operator: Thank you. Our next question comes from the line of Mark Delaney from Goldman Sachs. Your question, please.

Speaker #7: Hi, you've got Ayush Ghosh on, from Mark Delaney. Thank you for taking the questions. And on billings, nice to see the progress there, with 2026 billings already exceeding 2025.

Ayush Ghosh: Hi, you've got Ayush Ghosh on for Mark Delaney. Thank you for taking the questions. On billings, nice to see the progress there with 2026 billings already exceeding 2025. Can you discuss the outlook for overall customer billings in H2 of the year, maybe relative to H1?

Speaker #7: Can you discuss the outlook for overall customer billings in the second half of the year, maybe relative to the first half?

Speaker #2: So thank you. We have made kind of steady progress. Last quarter we added ecosystem partners for the first time and as you mentioned, we have exceeded the 2025 levels in 2026 now that we're at '21, 28 million.

Kevin Hettrich: Thank you. We have made steady progress. Last quarter, we added ecosystem partners for the first time, and as you mentioned, we have exceeded the 2025 levels in 2026, now that we're at $28 million. In addition to VW PowerCo, as highlighted in this letter, we added Honda, an amazing top 10 OEM partner with strength in engineering, both within automotive and a broader set of product offerings at the end of a quite extensive due diligence and selection process. We continue making nice progress there. As I referred to earlier, you should expect customer billings to be a metric that has some variability into it. The things that we control would be to advance the relationships individually and to continue to add additional automotive partners, as well as to start to add partners from these new spaces and to increasingly turn it into a portfolio.

Speaker #2: In addition to VW PowerCo, as highlighted in this letter, we added Honda—an amazing top 10 OEM partner with strength in engineering, both within automotive and a broader set of product offerings.

Speaker #2: At the end of a quite extensive kind of diligence and selection process, we are making nice progress there. As I referred to earlier, you should expect customer billings to be a metric that has some variability in it.

Speaker #2: The things that we control would be to advance the relationships individually, and to continue to add additional automotive partners, as well as to start to add partners from these new spaces, and to increasingly turn it into a portfolio.

Speaker #7: Thank you for that. And one more from me. On the sort of non-automotive markets—QSDC and QSAS—and again, nice to see the progress there.

Ayush Ghosh: Thank you for that. One more from me. On the sort of non-automotive markets, QSDC and QSAS, and again, nice to see the progress there. Can you discuss some of the timelines you're seeing from customers and production volumes that prospective customers are requesting? How closely do these specifications align with your more traditional automotive roadmap? Thank you.

Speaker #7: Can you discuss some of the timelines you're seeing from customers, and the production volumes that prospective customers are requesting? And how closely do these specifications align with your more traditional automotive roadmap?

Speaker #7: Thank you.

Speaker #4: Ayush, great question. Now, going back to the prior question just to finish the thought—Kevin was talking about Honda. Adding another paying customer that we can disclose is actually a big deal. That helps to further round out that portfolio.

Siva Sivaram: Ayush, great question. Going back to the prior question, just to finish the thought, Kevin was talking about Honda. Adding another paying customer that we can disclose is actually a big deal that helps the surrounding of that portfolio. Back on to QSDC and QSAS. The automotive specifications are very well known. Each of the others have their own unique spec needs. For instance, safety is across the board very important to all of them. Especially in a data center right next to very high-value GPUs, safety is extremely critical. Power, especially in the case of data center, it is discharge power that is needed. In the case of the data center, again, low temperature operation is not important, but higher temperature operation is important.

Speaker #4: Now, back onto QSDC and QSAS—the automotive specifications are very well known. Each of the others has its own unique spec needs. For instance, safety is, across the board, very, very, very important to all of them.

Speaker #4: Especially in a data center, right next to very high-value GPUs, safety is extremely critical. Power, especially in the case of a data center, is discharge power that is needed.

Speaker #4: In the case of the data center, again, low-temperature operation is not important, but higher-temperature operation is important. In the case of military applications that we are looking at, not losing capacity while being able to discharge substantial power is an important characteristic.

Siva Sivaram: In the case of military applications that we are looking at, not losing capacity while being able to discharge substantive power is an important characteristic. These are what we claim credit on the QSE-5 platform, that it is a no-compromise platform that is able to supply power without losing capacity, et cetera. You can see that these new businesses, new verticals, are complementary, and they play off of the basic capabilities of the platform.

Speaker #4: These are what we claim credit for on the QSC5 platform—that it is a no-compromise platform, able to supply power without losing capacity, etc.

Speaker #4: So you can see that these new businesses and new verticals are complementary, and they play off of the basic capabilities of the platform.

Speaker #7: Thank you.

Ayush Ghosh: Thank you.

Speaker #5: Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press *11 on your telephone. Our next question comes from the line of Winnie Dung with Deutsche Bank.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our next question comes from the line of Winnie Dong from Deutsche Bank. Your question, please.

Speaker #5: Your question, please.

Speaker #6: Hi, thanks so much for taking my question. The first one is about Honda. I was wondering if you could sort of describe the next steps to securing a deal like PowerCo for Honda.

Winnie Dong: Hi, thanks so much for taking my question. Firstly, the Honda. I was wondering if you can sort of describe the next steps to securing a deal like PowerCo for Honda, and any sort of high-level timelines you have in mind internally.

Speaker #6: And any sort of high-level timelines you have in mind internally?

Speaker #4: Thank you, Winnie. As you know, Honda is renowned for their engineering expertise. They have spent a lot of money on solid-state battery development already.

Siva Sivaram: Thank you, Winnie. As you know, Honda is renowned for their engineering expertise. They have spent a lot of money on solid state battery development already. They have a large pilot facility. They came in and did an incredibly deep evaluation of the technology and saw the synergies, how their core investments can be leveraged with our architecture. The ceramic is common. The Japanese ecosystem that exists that we have spent so much time creating, they all go together with the ceramic, the separator, and the lithium metal anode-free architecture. They clearly see that this is the way for them to enhance their solid state portfolio across all of their products. Immediate job is to move this joint development into the next level of development and move it along the same template that we have developed with PowerCo Volkswagen, so we can move very quickly across their product portfolio.

Speaker #4: They have a large pilot facility. They came in and did an incredibly deep evaluation of the technology and saw the synergies—how their core investments can be leveraged with our architecture. The ceramic is common, the Japanese ecosystem exists, and we have spent so much time creating it.

Speaker #4: They all go together. With the ceramic, the separator, and the lithium metal anode-free architecture, they clearly see that this is the way for them to enhance their solid-state portfolio across all of their products.

Speaker #4: So our immediate job is to move this joint development to the next level of development and move it along the same template that we have developed with PowerCo Volkswagen.

Speaker #4: So we can move every portfolio.

Speaker #6: Got it. Thank you so much. And then, on the QSDC and QSAS, I was wondering if you can perhaps talk about some specific milestones that you guys have in mind for those two business lines.

Winnie Dong: Got it. Thank you so much. Then on the QSDC and QSAS, I was wondering if you can perhaps talk about some specific milestones that you guys have in mind for those two business lines. For instance, would it be shipping cells to the data center customers or some form of partnership, or any sort of announcement that we expect to see this year, or perhaps into next year? Thanks.

Speaker #6: For instance, would it be like shipping cells to the data center customers, or some form of partnership, or any sort of announcement that we expect to see this year?

Speaker #6: Or perhaps into next year. Thanks.

Speaker #4: So, Winnie, yes, you will see announcements from us on both of these, and that will give you a timeline. But, in a general sense, I can use QSDC as an example.

Siva Sivaram: Winnie, yes, you will see announcements from us on both of these, and that will give you a timeline. On a general sense, I can use QSDC as an example. The 800 volt transition is in front of us. The megawatt rack also is just ahead of us. These all are going to be deployed in data centers towards the end of 2028, which means we need to be ahead of that with respect to developing an integrated product and delivering it to them. You can see natural deadlines developing when these transitions are happening in the marketplace.

Speaker #4: The 800-volt transition is in front of us. The megawatt rack is also just ahead of us. These all are going to be deployed in data centers towards the end of 2028, which means we need to be ahead of that with respect to developing an integrated product and delivering it to them.

Speaker #4: So you can see natural deadlines developing when these transitions are happening in the marketplace.

Speaker #6: Okay, great. Thank you so much.

Winnie Dong: Okay, great. Thank you so much.

Speaker #4: Thank you, Winnie.

Siva Sivaram: Thank you, Winnie.

Speaker #5: Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Siva for any further remarks.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Siva for any further remarks.

Operator: Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Siva for any further remarks.

Speaker #4: Thank you, operator. I'd like to recognize the entire QS team for their execution and to thank our shareholders for their continued support. We look forward to updating you on our programs in the months ahead.

Siva Sivaram: Thank you, operator. I'd like to recognize the entire QS team for their execution, and to thank our shareholders for their continued support. We look forward to updating you on our progress in the months ahead. Thank you.

Speaker #4: Thank you.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Q2 2026 QuantumScape Corp Earnings Call

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