QS - Earnings call transcript Q2 2021 | QuantumScape Corporation

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Operator

Good day, and welcome to QuantumScape's Second Quarter 2021 Earnings Conference Call. John Saager, QuantumScape's Head of Investor Relations, you may begin.

John Saager

Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's Second Quarter 2021 Earnings Conference Call. To supplement today's discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter.

of want for your posted forward-looking website as I Safe to on begin, and provision update. Harbor statements part we to attention call the our Before quarterly our that is

statements performance. operating relate financial future or events Forward-looking future generally or to

actual we that materially and theories beliefs the could our financial cause factors future cause those to materially uncertainties differ subject may results expectations actual results for predicting and not projected. from Actual and in including from Harbor risk XX-K these outlooks. content results regarding Our to statements to provision posed The may risks matters materialize. and are forward-looking the that Form identifies difficulty by other filings, of cite our SEC Safe uncertainties reasons the that differ in

cover Joining Kevin call update us our the then and CEO today over a Co-Founder, detail. turn our strategic With provide to will I'd QuantumScape's financial will Jagdeep and like on the that, and Singh; Chairman, to outlook in be the Hettrich. business, results more will Jagdeep. and Jagdeep CFO, Kevin

Jagdeep Singh

our John. developments letter a our Welcome for published call second summarizing of the highlights to of Thanks, few XXXX. quarter. we today, the earnings quarter major I'd last from Earlier describe the the like to shareholder briefly here.

shown our and and cycling now First to our we and in most form the four-layer are remains life retention cycle early development and built have testing single preliminary we've capacity and report are currently first published excited cells. we significantly, from shareholder cells what commercial similar we factor. that data our for XX-layer tests performance to letter, In

be of we concrete of have been specific, manufacturing number have process. by more our the has improvements the encouraged XXXX, To result the cells XX-layer goal was to XX-layer this of development to cells cells early. separator Our XX-layer so to our first a are end of

change step quality in result consistency. improvements these increase a and separator in together, Taken both

process these progress effects expect our scale-up we development manufacturing positive we as improvements, our to As through knock-on map. baseline we to accrue road

data since and our to to and we is technical As paying To July layer first XXXX, this our very context, cells. at in that in rate step parameters able point believe and cells. an sign focus said come. in our we've put public, are this for of we've separator is how on change sales the December on about single be helpful XX-layer we consistency going showed In four-layer improvement us, well development and exciting encouraging off. Then early bodes it's showed forward. that share area to first to February, first now achievement key going is our we this far quality plans look To full-size think this progress rapid

metal offering we cells a platform, lithium important iron We our and of us our design flexibility market. which of the Another low-cost agnostic is cell development, chemistry this automotive broad to our solid-state demonstrates our and believe the made phosphate, with commercial extend LFP. with tested spectrum compatible anode-free a to and cathode confirmed lithium allows cathode, product metal that LFP

accomplishing high-volume of results, quarter of a work process, this our us on on our these been precursor engineering has automation much feed our we development high-volume iterate as technical to further addition variability, to to focus QS-X our pre-pilot line installing and manufacturing tools learn to reduce our towards refine build-out process continue allow In goals. year-end exciting will facility. past tools Such and as our and fast manufacturing the

our as treatment separator significantly of magnitude separators process order equipment of flow result over current high-volume, as our production For throughput a example, well more of quality uniform the expect processing. an continuous heat by as improve to improve of the we

Just Celina as VP XX Patch Among to from particular XX% and last with our grown over of as pleased Tesla, important focus headcount a by from are We've our and is the professionals. Mikolajczak, team. high-tech Flash days Inc. many Clayton manufacturing company our on tools as attracting our VP Engineering; as welcome Manufacturing Panasonic Micron IM and Manufacturing. we others, Technologies Technology, experienced

to the data performance optimize design. to the more XXXX cell and for is focus many Our of comprehensively collect characterize rest build and XX-layer cells

as next customers In targets. addition, year's with sampling working and we continue towards customer Volkswagen will closely we other push

such metal anodes-free on We Lastly, across the committed from appreciate the to to the This the to through will requirements mind insufficient vehicles in as But improvements automakers charge in it's metrics to to today's is to comes announcements of and less pace incredible growth car be require on first look will important significantly technology drivers, sales restrictions progress a are batteries tightening are at just governments world key believe battery not will combustion and an cars of phasing required market term. ways, also remaining quarter sold. that those switch. volume as all new picture. seen cost in And X% and to some necessitating I'd is standard seeing like that of moment current with still The accelerating a XX% function over address to starting We engines incremental the better lithium are this approach. keep out market world combustion engine take which that than of meet that delivered better selling automakers EV at markets to growth ultimately but short the time, has believe our are the electrification all than to technology. the range, with continue bigger over buyers This marginally in the the number long last safety. step growing EVs enormous EV easiest X% entirely. automotive major is like set and

And them. are hurdle months continue in our battery we major commercial quarter. becomes that market. Hettrich, the In position Kevin say competitive we progress we to race open we our confident we've Kevin? technology few and Q&A. this us, encouraged we of And With have developments it to shareholders of every more our resources a up ahead. ahead on the are our performance clear with that team, our seen challenges strengthens deployment short, a our and financial it capture results technology are towards to next-generation by there CFO, that, we the excited the to to in the Although share before I'll overcome over hand are in moat to fundamental words

Kevin Hettrich

quarter, $XXX second were million. Thank you, Jagdeep. expenses operating In the our

$XX the was spend with quarter. million, operating quarter The CapEx line second in was $XXX expenses of expectations million compensation, to were million. our we approximately $XX quarter's from be This the in million. earnings call. stock-based full year, our Excluding consistent of with expenses $XXX range cash level operating last expect in the entering guidance

the advancing a we reflects ordering tracking of line facility to forward pre-pilot with For setting projects. million higher pull due of engaging spend $XXX of specifications, This primarily CapEx the progress year, now full timing vendors, guidance and into to XXXX see million, equipment than previous XXXX. $XXX QS-X from manufacturing

with line Our our overall remains in for QS-X previous spend expectations.

our letter, operations help the also from million vital cells test unchanged. derisk we billion shareholder Our in comes in to to in year blueprint. plans we on the when to system a update QS-X, update establish XXXX in on into Learnings year is than for From XXXX CapEx liquidity clearer R&D our CapEx this QS-X QS-X, in believe, We'll related greater letter. produce QX and $X.X free to timing cars remains end and QX QS-X respect With second a growth. we QS-X focus. $XX for in We'll will burn battery guidance with plan payments guidance flow to quarter. cash, manufacturing mass step scale-up. shareholder for full cash spent the

manufacturing company balance while achieved development and second quarter $X.X a than progress strong billion Our liquidity. ended the maintaining with We in more sheet. on

sufficient with the to additionally We through expansion. to subsequent exit we initial XXXX fully QS-X fund to believe, over contribute expect $X.X and QS-X billion, capital, to production continue QuantumScape

income stock net the $XXX the for noncash of adjustment fair quarter value including was million, warrants. million in of common assumed GAAP Our $XX impact the

before market Of passing adjustment, regarding in investors for our have about our the back lithium warrants line final mass the this the look excited expectations. mission quarter redemption John. forward solid-state metal announced originally noncash to batteries and to for our net this accelerate We're adoption help most loss the One to progress of vehicles. million to warrant $XX been commercialize thank public with Excluding like million, supporting issued, approximately already exercised. the quarter was opportunities public We'd XX.X to the recently the ahead. and electric comment

to an million X.X approximately public As recent believe further of streamline date, of is capital We only our redemption step redemption simplify warrants structure. the release press and outstanding. the remain important

review and release For X-K our XX. on John? more press please filing you, that, to With over John. information, July

John Saager

Okay. we've Q&A questions in app IR our inbox. a over We'll from Thanks, few begin portion and received today's with Kevin. the Say investors

John Saager

be factory is, facility cost would versus much new to facility, the a from you a manufacturing Our how a savings would building first if lithium-ion How question convert to had scratch? QuantumScape you traditional it? do

Jagdeep Singh

factories. that demand. new constraints, to we're Yes, needed that I'd Current is the growing continue need factories really to demand no seeing John, forward supply be to the and will given capacity first each one and is built the meet repurposing the about say thing batteries year going currently for factory be talking

factories, for need anode with will build line did cost. coaters, want anode ion capacity lithium us But Our would we designed reuse if the since default to first, the would all This the factories without don't coaters increasing of to adding QS-X be; less. to repurpose main changes new you anode be line QS-X. cathode plan with allow and manufacturing

the an since Second, don't need make the existing prismatic stacker that’s AI cells SEI area have given reuse for don't have And we'd to could anode simplify to form anode formation finally, we anode. tools also we cells. we

factory savings we commensurate if we were leverage to our So, route. and go of cost be believe find you most get that lithium-ion what to to we'll able

John Saager

you'll What manufacture unproven gives to able processes required ion or be Okay, makes facilities? versus at What changes sense. are lithium scale? you today's confidence

Jagdeep Singh

main and that enables this so us manufacturing use separator pure anode. that have unique lithium metallic the fundamentally, approach difference And ceramic between we conventional is our a to lithium-ion

scale at the or development. those tools are this first, things; that continents; the earth are is second, separator abundant two based new scale scale multiple so the confidence can on today to make at the battery can leverage used industries materials on tool of fact and us in gives what is that suppliers custom either we precursor use industries sector So, with this that already requiring manufacture multiple we without ceramics we

John Saager

as some extreme Development the of key one Holme, that Officer by are The Tim Say team questions Chief our of shareholder his stock two-third Noting shares. remainder claiming members with of CTO, XX% shares by and our Officer these sold sold Sales of his being Legal are Chief our holdings. from that app. sold perceived

So the And sales? the is anything question read sale? size becomes, share of to into you the on comment those there share can

Kevin Hettrich

of the questions references correct John, the sale the percent first, here. accurate not in record are to

of XX, of June XX% of Technology Singh, Legal quarter, Co-Founder holds Tim, Development Chief prior Chief end of As XX%. the Chief the holds holds as Mike McCarthy, our Officer, XXXX, XX%; its and our Mohit our Officer, and Officer holdings;

Jagdeep Singh

satisfying commercially we've as to shares factor I to mentioned prototype can a call, last obligations, until relevant committed on outside I I If delivered in any Volkswagen. remain of a just selling add, form our not Yes. tax

John Saager

Okay.

next soon you're And you having Our the comment with going be discussions on question, ongoing you automakers? production? can into how will

Jagdeep Singh

production time in in QS-X production line and the with into the production followed XXXX commercial 'XX our frame. plans pre-pilot go to on side, So our XXXX, are by

customer I'll policy prospective that about to allows expressed discuss not our deals which near-term to One On to to And finally, interest actually couple front, add with is we of final. work won't able every until little be strong. And strategic us they're second, a customers say a interest. plan in because the demand be This that than choose to with. customer more our higher customer work I'll remains be fact, things. is capacity, inbound appears we

OEMs supplier decisions many consider addition, In the to be badly proprietary.

how we them, So usually the ones partnerships. do for them let be that respect their announced

John Saager

battery combustion solid What's the an lithium-ion fire advertised because having of less it's advantage performance internal to real your cell battery, similar cell? XXXX of Tesla's likely Since as engine. state versus is the and

Jagdeep Singh

Yes.

since content available we're metal cathode So, side, incorporates cathode are incremental little But well XXXX of as Tesla's a on higher for including electronic of these dry number improvements cathode and to us advances, the manufacturing processing like so self-pack cathode the on. agnostic. side bit things design, all a

enter. on at So anode better or entity in we of better limiting end the you ion conventional density still factor can elimination for than or silicon lithium like don't cost couple cell these all improvements the metal than anode, the it key energy believe carbon with we and the of getting metrics because you do an anode-less we lithium our is, than metal fast carbon because believe fact, carbon up charge silicon those parameters. a And

John Saager

What and market full significant acceptance challenges do tactical to production? you see as most scale the to

Jagdeep Singh

main today. the earth at our So which, since mentioned abundant and the is production earlier, are scale I challenge believe is and already used the separator as commodities tools scaling we up processes production, are precursor achievable materials

that on our The today was second made challenge, of count, makes but course, announcement that increase already we've progress our clear strong front. layer to

our good feel accounts. we So their to increase ability about

John Saager

Okay.

battery Say the you true? Do reports the third from from in app. your the prove your question last claims are plan party test to to Our all

Jagdeep Singh

said our So connected of multiple we customers. the independent And as customers their believe testing best had in course, we've we is before, testing labs. test prospective ourselves by

generation still submitted ourselves And be sales them. to have However, responsive focus that we don't we some to total that testing, to share intend for to out, asked third-party have use lab this to as we're investors of our I'll to results we investors, remains I every within our a point say and want validate providing do on we our have results. as those customers. we'll ourselves though, that --

John Saager

the guys. ready We're for the Q&A to Operator, lines so of portion call. today's begin now open much, please Thanks questions. Okay.

Operator

from Rod [Operator from Instructions] is first Research. Lache question Your Wolfe

Rod Lache

in maybe in can questions. characterize explain Can maybe XX-layer I bit And two different given you on lab, a progress that improvement challenge wanted learning you second manufacturing. for characterized cell the to up that were you making the just manufacturing? any you're is scaling ask And of speed One and is us? evidence you just specific that little you the as you kind points of just what production said on manufacturability? specifically, on data yield, the of

Jagdeep Singh

Sure. improvement let the manufacturing the Rod, -- question so on question first. answer me about the

cycle better it core quality, better as the as better uniformity, better All have better on of mentioned, better things behavior the consistency at is essentially all power, the low about if That temperature. the films. metrics the are to parameters out care that for your improved we performance from we in you So, those is, one and turns of critical improvement of films. consistency really quality

a So, started to manufacturing a this improvements the new process, which represents, us as means of of I Better combination allowed us the which that better yield, are more make films. there mentioned, number give films we a side on better of films usable.

films. the that fact XXx with a cell that So us many XX-layer as deal requires helps

it you So nonconformity for multiple us helps having then more up are have you films good, secondly, there. not the then that me. of And effect if can as you stack compound films,

XX-layer achieve better you helps cells. quality better So

XX-layer. the about question the was that So,

about for I Is think, right? call, scale-up Rod, you that also plans. asked

Rod Lache

could that with progress any us the of speed and metrics just production share there? you you're yield, on making The

Jagdeep Singh

Yes.

the That's tools. and magnitude we are So for the we're of say was these using that if the did in physical noted you referred and example, that in tools size throughput baseline treatment industrial tool letter there's one new tools big that just it photo heat more kind two, currently the literally letter, see the can of thing that you we of this order new of to installing, said our scale it a impact in process. the we're in than

be well needed provide for as provide multiyear provide improvements and test able So completed that of internally to higher function customers. both to enough both cells to as kinds throughput in the those development are volumes to our cells of are step

last So like reason scale that's has the the been progress why the we of feel over strong quarter.

Rod Lache

And can. I you iron just if phosphate your pretty The on with were Okay. interesting. this technology secondly, made comments

in targeting XX% like yourself? for could Would based? expressing that be cells LFP that the same hour I hour So in XXs you're XXXX something it customers sensing a $XX market cells that from today, in interest? And be $XX $XXX. were iron like So versus per it think you expensive, your the if the are kilowatt nickel, for with kilowatt is less

Jagdeep Singh

Yes.

precise different, structure, think what our I on given two helpful here for So provide. I that think, I we've cost guidance of is don't be There's cost the models. your but can parts could

we than lower First anode-less believe already there cost handle the of you Rod, on it all, no at anode of side, anodes course, an metal lithium doesn't it design all. because as is know,

time. I me, with also know, zero ash LFP because active for lower get NMC have prices, there. benefits bolting -- material over I kilogram. don't mid-single get digits now been, normal if relaxing that The When in an don't know, you the maybe $XX per cost. excuse additional -- then can't LFP dollars kilogram. -- capital as spot cathodes, price of know than cathode the comparable You per low and fluctuated price has cost price The the materials, terms you having in low cathode, the Recent recall of I XXs you couple dollars prices is the see low for material we may

So having helps ends that overall you've cost you in the really eliminated the anode up that then anode-less with the pretty cathode the difference the there. being lower cost And that's cost. larger cost, a cathode already a of a factor given significant so design, of actually

think cost what to cells. XX% LFP conventional of that even roughly I in we out cells XX% cost model lower advantage So believe for our We the of out, to lithium-ion than the think the that is original net the laid it anodes. because holds we

is possible of couple cost lowest cost a anode-less LFP of coupling and the that with beauty literally metal is a of things. with low lithium design design cathodes. with take couple the we that a anode One very so you zero that know of, you And cost a

got energy that of lot taking cost-advantaged up that a of metal cell. today's is have range address it directly now conventional So LFP to fundamental secondly, doesn't that it's a very of where But you've and it battery. with NMC-based take you coupling same which, you of And disadvantage the density. a by course, the approaching

have cost you really the and a combination, one -- in You it's -- systems; So that to going market are agnostic. understand in biggest solution thought, we some with the the this So address a help lowest weakness kinds to we these up beautiful are of lower reported cathode b, LFP, right? believe end we for demonstration we really that right?

whatever simultaneously. We is our of kind between this of lithium both those ability cell are on LFP have axes completely race the cathode not anode. different axes we OEMs the of work or space. want, Those advance and multidimensional with to and some battle metal can And

So design the becomes that extent a believe automotive LFP, the that lithium metal we the for to that subsector and paired exciting LFP best possible that's market, that important with by LFP result. becomes a what's certain of anode

Operator

ask José Please question of question. from next is your Asumendi Our JPMorgan.

José Asumendi

Asumendi questions, José of JPMorgan. A couple of please.

QS-X, help accelerate is Tesla expect the to to Celina think sense the spend a you're bring have little you of When interesting of rapidly. for your and from give first, of rough many the that can But you how end people one QS-X? onboard in timing end Can of rising CapEx to about I most industrialize by with do regards production QS-X Second, some to bit us the you you a plan how mean The installed most us when of and of facility? do you she talk of give do and the and I background that to the some for trying you hires. can you Panasonic terms And where transition of three, coming the headcount QS-X? year, stand? sort can year? machinery

Jagdeep Singh

the José, is thanks Yes, This Yes. for Jagdeep. question.

the the then take forward, one relatively take to first go me two. to it's safe Kevin and last because I'll Let first over hand ahead

if with a Panasonic, So facility high-volume Celina doing her you she we what the very manufacturing in because she expert just believe as now, of analysis. I tenure ran Gigafactory called in of at of who was expert who's over largest, the associate to production battery a deep in be what's out worked a where to background, previous be engineering there. have largest which She not on career manufacturing Associates, used this She started she expert, They key board. the Uber. safety went group battery the world. one and to know, operating is super Reno, Panasonic. a a manufacturing obviously is at we're went Tesla from to at she's the Failure battery happens the not one But delighted mean, pioneers Tesla, lines She that to her Analysis introduced we working which Exponent, before was she over then many in with models battery. -- called the now

blades she's but gets amazing deep complexity explicitly, of combination your a making high-volume of all of level, schedule. our engineering at millions where about Because So that run to and with that cut super you're need the on engineers over sharpening think understanding nothing at be never addressed using of you that just like, you sophistication the the understands use. battery are right the to that films can battery also the cells you're really line scale, an I little she things that got mean, engage on things she have line. on

first chain the can supply battery you're volume you when is highest world's in fantastic. issues that all production who's of worry hold of manufacturing have dealt hand doing There's things order. have just up the line small-scale a line. those somebody become to and lot things one don't on You Having in board that with about real

engineering is the on Head for the Patch. Now things Clayton's Celina and backlog reason comes of engineering, the runs The processes the line run semiconductors, of are will Clayton that's tools Patch Clayton so then metrology with which is that -- when you Clayton getting relevant And aggressive of that all at why the that from manufacturing the group couple and very actual using use. course, is and like does semiconductors. production we of the to of line, expertise be a processing to is the limits. control of be are a techniques some a we -- scale the get can relevant materials process we're metrology there's lot ceramic to separator line, operating as using the on able up of and really going in the keep constraints even within to data lot semiconductors we And the controls that leverage techniques tight parameters. over very the

So, of just to successfully the we examples those we're going making really are our two enhance of are of journey. types think on hires phase that execute next that to our ability this

Let to address me two the first Kevin you questions turn over asked. to

Kevin Hettrich

the for José, you thank question.

around battery really most in operation, the the First time line cells prospective and working customers QS-X machines we've the installed question question To 'XX time for XXXX. answer of that into given to spend QS-X. CapEx was of done be backwards, R&D for line the on produce in will cars in guidance some put

we question head second around today's letter just XXX. count over mentioned the in for As have headcount, of we that

will be increasing. stick on $XXX comp, by we million to spent excluding and if We the that year, and extrapolate our number of that headcount quarter, the haven't ZIP guidance could and get looking stock-based depreciation right for at to In $XXX million our growth. the cash the to with of we $XX as year-end, code the given guidance end but which it by implies million to in you OpEx, OpEx that,

headcount. together, get two of in put So those ZIP you'll if you total our code

Operator

Our Jonas from next Morgan Stanley. your Please question Adam question. of is ask

Adam Jonas

your interesting LFP battery you really, on and you clarification, believe I call, Can hours achieve XXX-watt for could a that give very LFP liter? of I you think gravimetric A could Thanks that per really density testing significant. range much. if well as also said really potentially per factor us using ask to kg? that the Curious form XXX-watt again,

Jagdeep Singh

on develop well. sure those Adam, I of numbers, we of us make happy because expect roughly as I the would obviously, certainly because to the have the on maybe there. layer had to be you but It's LFP are we're them But you to comparable a creation can back eliminating precise Yes, we great metrics to we cell. handy get don't modeling. did I'm anode pretty the question.

Adam Jonas

of us Could that's some your But so yes, that chemistry those because all. out again. of going you to be Okay. cathode cells give help content also much versus cobalt you on could focused remind I the Yes, it's conventional? us understand dependent. us

Jagdeep Singh

Yes.

So the current chemistry. been chemistry we've is using that the X-X-X

So be that will cobalt. XX%

X% are there offered by are that. are the are new cobalt X% example, chemistries for There lower even some, that that that providers are However, than content being cathode cobalt. or

continues two number that So to for decline reasons.

ESG As commissions. obviously, the less one the the that if I profile you on you know, certain is best if have profile also working and places cobalt less have cost you the, in guess, two, improves it improves don't And are cobalt. a is mined

that's an an from premium benefit cathode architecture level obviously, have slick also is happens of Adam, low-end pointed LFPs, it's iron-based needs application. very going breadth on. a given broad high-end have and super The that a the in one is having high have spectrum that the selling low investment, the the that automotive of digit out, can lithium then of in range solid separate and mid-single as of terms And dollars like we important most with meet trend cathode-agnostic the And to But charge cell, nickel number allows that to a entirely. be is, those you cathode-agnostic anodes also the that's -- And cost. an right? is criteria, enables independent the can So as that's LFP iron super takeaway, -- and design, band. per so whatever abundant to kilo requirements in vehicles as you The fundamental best brief anode, rely, that vehicles a well that a it's super material is ours. fully in addressed is be where price what couple it

Adam Jonas

Okay.

questions testing prepared some the, the you're one provide and might submit future. in mentioned yourselves you the when we me. independent that Jagdeep, in for what Just think, results for able to to well? carries be us be end do some not see be one think tell at would it fact you're -- seem iteration, of going the carry lot isn't I time consider of you'd of the those body you and at testing it'd results? believe I for to a final going again, it that Can every And it as to this even you weight -- the understanding that weight to I'm one going does suggests this but and that

Jagdeep Singh

Yes.

this have certified several battery But a kind hundred it test. takes XC is months a a time. Even rate, to those already So for cells test XC, get And of cycles. to take up actually does a submitted we sort few lab. testing at of accredited

it, most in why them. third-party you're if belief, we're when I though do our test lab in more even have I the So those matters we is do that's comfortable a the testing that that some feel doing and customers their this. that is what results, investors think there's labs, publish will -- as said the we it definitely call, But right, is

for that do you every of validation will the generation those to And point of don't the tend appreciating we But think definitely thank basic be this having I we that So cell. publish for value. could results.

Adam Jonas

layer are these four And one layer? cells or

Jagdeep Singh

the ahead just super super to in unelevated, So, okay, what on. that just cells on But have So, at temperatures, really uncompromised high core We much unelevated at to to that conditions, didn't call validate -- charge the these of capabilities not we this all high layer about test going cycle of rates are if be discharge the high so. and pressure, ourselves the get is cycling that you not of going single temperature, with given want talking the we start forward. like XCX along don't so data and and publish too we'll yet results right?

Operator

is Cowen. ask Our Gabe next from question you of question. Please Daoud

Gabe Daoud

of so, at applications? so, then and the XX XX-layer but guess, XXX see the for should or or that cycles this to if far. closer to all to get remarks amount when have kind number the just get obviously XXX close on for prepared the ultimately targeted last to XXX maybe an of I so number expect question, test we Maybe number you Thanks that answer the guys cycle you to,

Jagdeep Singh

Yes.

our encouragement I tracking call performance made we, more target primarily, having the on So and I we year. these involves work we're that test that that be And successfully made to of on those think, think the end main I done. characterize of cells the of the cells. I early remains of actually so mean, think, lot gives the point level results your goal. is And work have encouraging and to making of and is some that can behavior these end be a There cells go us

lot get make process is the and design data of We then aspects use we cell a cells. the improve to data. that the that manufacturing we So, the typical and use the We retest. of

what into those we -- So, that is the moving send there. those we all instead what basically that that things we are -- but results expect fast learn can conclusions a vector in on. do kind the do kind this we to Also that to now of so referring sample on we cells. valid letter, in really to draw model. statistically those year turn sizes us we ourselves that's allow baseline modify that we end mentioned tests forward us of are And and the a call to to the The way based idea the test of moves design we're that actually on the

Gabe Daoud

it. Got it. Got

going then the follow-up, entry highlighted lower a And helpful. number for LFP a LFP to just cathode, just cost obviously, use back potential That's have OEMs models. to quick Okay. of the

cathode again a partner? And sense your to more a LFP pull just really a request potential the an kind of of Or on is trying specific to request, so from it it separate? based test the highlight was get Just the guess. nature of was with really to a agnostic cell decision cathode I of

Jagdeep Singh

aren't announced. Yes. finalized I mentioned, or about specifics that we We understand as don't question. the don't I customer -- talk

won't question. a that think there really in I be a role take the to able low-cost is cathode automotive general So we're responding to your that what the I market idea here. But for answer is to

make the density. we've people one higher fast drive its density the focused it that weren't lithium on to a many resurgence more sure -- end particular cell. been as NMC had be because It that highlights energy even have stable. applicability this that has It want But benefits been So primarily depending energy kind and LFP in we right? cathodes, be disadvantage, about. can we've can the thinking to of on that here. over how density a It advantages can talking metal of it's And it's remember, be that we somehow to interest has applications. go design big better to low cost. felt we Again, basically cathode. can lower obviously analysis you sort make the any of power line thermally given recycling which like is But LFP, tied really is performance. contribution XXX earlier, And hobbles mentioned higher number It I of

was take want low the clear So the energy to on. biggest density. the thermal demo couple with addresses the just that so directly benefits low-cost design limitation And that and cost and of the and reason this we chemistry, made that why could safety do that that the derive anode-free you stability

happens really think, to same many would design So to be ballpark the idea OEMs, a offering. that chemistries, roughly product Time a exciting of I consider low-cost be today's that pretty the NMC. as in

demonstration. why So that reason the that's we did

Operator

Kallo next is from of Baird. Our Ben question

open. is line Your

Ben Kallo

design. the LFP agnostic a jumping on time. been just final It's always one Maybe just cathode

works LFP So like you're It hasn't cathode. a rate. us that Is correct? with that telling basically just change it been

Jagdeep Singh

hasn't been what? the part I of Ben, missed last question, the

Ben Kallo

resurgence a was of in because kind always was or of there it there some cathode-agnostic I You testing design. emphasized because if thought the change

Jagdeep Singh

to role show design. have we'll before, and going solid home actual -- just was It years pointed didn't anode-less our as QuantumScape enabled a separator. cathode that think forward. we metal But out is data where both It's materials, next anodes always said which people those Yes. contribution state Yes. somehow both want of lithium having and that because lithium the play unique we're to NMC design, are course, cathode-agnostic. was we've except by, cathode think we interesting all you correctly, point over this the a actual have many cathodes is cells And constructed we our just with synonymous because LFP with

Ben Kallo

On hybrid? across the just about increase expands battery talk and you headcount Could recruiting environment congratulations. board in the this capacity of type with being

Jagdeep Singh

Yes.

that's see rapid So recruiting. we analyze pretty been growth. through. year we quarter fortunate during And of actually the that come of XX% lot a So And to era great of a rate lot if good we've pandemic we a people had candidates we've luck I in alone, very said, we grew mean, the year. right? rate, hired the with last

level that So, of of really we're high. able to really a hire employees quality keep we

already I And tools capabilities, an shown my capabilities terms or resourced, is, access engineer there's many on will stuff. a we core be think so battery or is they're lot scientist disruptive there is are if published. we've you universities. have metrology have other engineers is incremental we -- companies the scientists, readily lab not This well because wouldn't that organizations, and on personal that place of extensive and manufacturing with that have to stuff. batteries, opinion working but because and even only test characterization of really that not we're in no QuantumScape this than really based data to next-generation a better capability the We've whether

just Celina opportunity such doing great year just senior that's tip going allowed having two really us we work forward have like and candidates. maintain us at the feel that The attract cutting momentum spoke to here. hired Clayton they're has are we helped There's about examples, we've some last many equipped people side work that the the a the manufacturing that obviously, of really fully the but spear. in our many, level, over edge that to lab So,

Ben Kallo

better then and like the new changed fundraising your products a Is people the word lack now? private that evolving just with of And is a how you right entrant I think, stage kind to horses, the pick it to companies behavior I we're all lastly, see that the go the for that Or too. guess, different for in? customers? the across from to And with pilot public markets of technology do on Has their front? their?

Jagdeep Singh

chemistry, are solid There's there's I what right? mean, I I'll we approaches obviously an it, other see I QuantumScape OEM alternatives few mean, type doing. way is here's of a Yes. mean, next-generation than right? for a through day our give opinion. other looking you you're the if based way

of that has under conditions they a keep there's right, XX can with not attempt we opposed cycle pressure those example, that debt the to for materials, four degrees templating Celsius XXX% of on has other that polymers. previous, The one there's is For those uncompromised about, that the able temperatures, dendrite to sulfide, shown of three them hour been state charge to to atmospheres discharge, approaches over XX using problem seen every solid prevent commissions. a really Every to as discharge. none of pressures, elevated talking types we've

would that, that. but we has news, that got if seen be exciting haven't So someone

to -- dendrites because just power And easy make low of results to at people is liquids you with are using with that of category it's power. try work. that metal second liquids get to function The exponential get an rates lithium are can

So grows it at can propensity But come you no exponentially. reduce power, higher exponentially. powers, that

taking and the then that's chemical lithium reaction that account of happens the between liquid So not the resistance from impedance growth and the even -- side into the metal.

even of approach. think power had -- the liquid-based are the day, low think, case improve metal a no outcome a number of silicon no may of because number you scenarios density in I XX, would anode in be XXX% no required. math is has atomic approach out But alone binder, X. an just the the that lithium it, to the silicon anode double if final, best going incrementally in viable silicon for mass that power carbon, anatomic type the those will cells. fine lithium is approaches the automotive lithium-ion with we there high for application those to is acting organ in So lithium not silicon for category where And metal like silicon. be be applications And And

weight if even still that four held mass atoms for of lithium you silicon the atom, the doubling one So every anode. you're and

don't the other So have really, and see anode-less a if of design, lithium any role honestly day, approach. the working end for we you metal at just a

claiming think So execute we simply but that out whether our the call product and out reporting can we're signal We're the real sector. we're And production. led that And done. get on we think the challenge whether that this is an it that really focused is, vision team an there's not better obviously not And I we've transform that, fact, opportunity believe keeps we execute. It's commercial in out team have really on is what the there, if the approach on. not that's those sign. to that doing encouraging we a shipping, a it's but to

Operator

next Delaney of question Mark Your is Goldman Sachs. from

open. line is Your

Mark Delaney

that details hoping manufacturing? was similar separator you think And you to could manufacturing more [intels] in current provide production you that made is, you improvements progress, Could manufacturing nice volume about the about separator. to talked the for use on that how of what may improvements you relative I about the you manufacturing. First, on the manufacturability separator more relative some discuss hear to

Jagdeep Singh

Yes.

me So let a different parts. invest two

I obviously, quality. talking process about jewels, vest that is we close of mean we know. quality, the are that's of really high obviously get separated our by that But was details to films keep think the we're effect And because the improvements the think as really some to the of net I crown uniformity. you

So of that's your compositional, everything that understand the affect performance these by on These mean -- are different of the lots will all forms. broad affect way, tell doesn't separator industry there's fully separator. films, activity non-uniformities. to working industry significance materials I from the these types non-uniformities non-uniformities of of of the things ceramic. deep And the morphology you your can some to I performance that And the non-uniformities

those talking in you do well. changes Not concrete that you be films want meaningfully some that's but get important of were to about films, improvements consistency. pretty so And that better point want a to outcomes high-quality our as only we're process and high-quality led And to terms to able repeatedly. the quality very

better So a yield. you get

relative tools to we're effect So shareholder is photos those of you image an the about. treatment the the really in at tool. the heat if letter, improvements of the that you're net are that flow continuous And talking look using, a then

every those go are heat treatment has done to of treatment. But a And processes, servers heat of sort through step. not most today, batch are for ceramic we in servers scalable. believe, lot they a So processes very

So what we have continuous flow here is a process.

tool run don't allows is separators what the seat is profile need is where as a apply we a run scalable heat film are conveyor us different treatment through treatment on you process to batch treatment belt, believe have the So the zones can through. have different And that that we that really tools. a these sheet

in the a Mark. make these answer we're the side, is duty quality was frankly, can treatment of that precision those produce -- are believe, the I'd that is further quality talking us two better on continuous scale consistency. now of the with we heat net have the to are two make about deploying, to for we the will your increase really better points question, better And these to treatment we increase And flow tools because key effect terms So One tools to films profile throughput. also, continue allow think we apply. improvements the

Mark Delaney

about missed think Company zero relevant zero update applied be of talked hear cells sold which talk that it, second the I be That's on pressure, to last about an my industry. didn't I about I I testing could for if had but I very applied. the pressure with cells cells helpful. for external question, with consumer electronics apologize hoping And was into potentially can quarter externally the testing

So progress front? that you [Technical share is there Difficulty] any on can

Operator

as there the this but apologize, operator. me, the silence Excuse is got I will be disconnected. line speakers'

a resume in will few. We One moment. short Instructions] [Operator

John Saager

to hear on up can want me? hang you it? do Operator, Kevin, you that

Operator

Presenters, the now main back in conference we room. are

Jagdeep Singh

I Can that back everybody we're got dropped. assume on, right? line for So apologize on? I are back the

Operator

the Yes, you conference. we continue. main in may are Presenters, back

Jagdeep Singh

you're so if answer know you did don't I the hear to -- your you Mark, So long, but question? can

Mark Delaney

providing had you external you hear update testing if with about This don't update. pressure. an that cells or I is didn't got I hear but not the zero about potentially know asked can sure I'm Mark. an I if me, but of not, question

Jagdeep Singh

difficulties Yes, calls. sorry I about can these drop, guess, happen on technical the

So guys. thanks for us, bearing with

So it of I like but dropped got my the answer. did answer sounds beginning it question, at the

volume the too with playing having so automotive we ones sector. that us was can to focus application zero-pressure well path get far. is has system that we And the we So automotive in which, be go can the also focus, consumer shown where reason the we our question pressure devices. is showed I not to we want But we Those option continue that, to said why is the exactly far enough an on to really consumer quickly served devices. course, want That don't make in can execute to the on able the of before that yes. work very target. of data we because clear distracted that answer. primary of applications are said your the pressure. is, The there's answer summarize we've fact address that because to consumer application from those under scope But that not sort The

What well, as you question that Mark, second the you had was I another think besides question one. asked?

Mark Delaney

for me. was it That No.

help. So I appreciate all the

Jagdeep Singh

drop the looks get like and has can It on. that chemistries, an address team the that very Yes, also on to did quickly. drop. that we everybody the did I my LFP I for -- did say answer Kevin wanted apologies back dropped.

Kevin Hettrich

QuantumScape about cells conventional the lithium-ion mid-XXXs the LFP X kilogram, would we asking believe you're QuantumScape cells improvement gravimetric with kilogram. the in cathode, the Adam, right design we hours now metal be understand anode lithium XXX-watt We an per approach. solid-state LFP separator hour for a Sure, in the best around combining with are per

Operator

Juvekar is last Citigroup. of And our from question P.J.

line is open. Your

P.J. Juvekar

NMC, you're You whether agnostic, cathode that cetera. say et it's or LFP

issue? it cathodes change did you the overcome content, informing of that each does have anode those battery? And flow lithium in that if lithium-ion Now different lithium how and nickel does, the the

Jagdeep Singh

Yes.

The the makes that cycling is anode forth circulate into carbon is no is the of normally exact intercalating carbonation that's same up difference again, particle or the approach may lithium as into. battery. the lithium into -- the There the back of only is lithium or be. that defusing So that that silicon particle in instead beauty our normal case and a that lithium-ion

So lithium. forms it plate pure retrofitting metallic a simply of

total when in anode. to whether to to any anode will, the pure of difference to LFP chemistry the of layer the definition, our and the And in lithium forms lithium. lithium-ion this is is in metallic there's the chemistry here lithium the relative lithium So anode. The going by lithium, you get through the place case, that case In get and lithium happens of held of what that the that goes the if is is graphite by scaffolding, ion, that NMC the right be come chemistry, roll both have difference only to any able out cathode anode. to lithium-ions

silicon, to each why away items lead one anode reasons And in state. it can of bond, lithium-ion take held no ionic that hold called anode. this So, common of lithium in and ions a doing metallic by on six the that's is lithium-ion We're becomes lithium-metal. place case as carbon held the of in But and the form that's why I other and each kind it's because in those is place.

So cathode simply otherwise metallic agnostic, lithium. same forming in using be the yes, that layer that and the is there's would anode it lithium is the into

P.J. Juvekar

little I'll my Okay. later. maybe I a come was guess question different, back but

your this terms market? size with change of the total of Now LFP cathode in compatibility, does how your TAM

Jagdeep Singh

And the this the number is a that market the of vehicles the address can about range have of Well, there of a to as way vehicles in sector sold there By overall terms LFP I is spectrum in overall requirements. for that think cathode, transportation enabling wide think an of that is broader market. a year. different we

anode our So level there market within based are fit. a applications would vehicle for not approach this the be fewer and which

the low some can with intensity can that cost applications improving while there those density we You battery. the world-class the that is -- solution But energy if low-cost applications could lab isn't even have, LFP, LFP argue that at where only with the deliver they levels. we range the that we and serve the are thing get matters LFP without

P.J. Juvekar

density, has And much that range? you How that which improve Thank lastly, power range. mentioned can your LFP, means that lower know battery you. we

Jagdeep Singh

Yes.

it's said metal shareholder hours that watt XXX the And at the letter, with XXX-and conventional pushed more lithium anode-less look hours approaching number XXX-watt but gets because LFP, believe is phosphate so conventional you if carbon So lithium-iron NMC batteries. with not the than we we the which year. to because numbers, it's up QuantumScape liter, per order actually significant, believe of range on or volumetrically only is per design, now of

So plus a exciting in low-cost penalty you far. terms it's very the and thus combination have without density energy of of that LFP of

we're why that So that's one of demonstration. about the reasons excited

and to terms with our ability very the the market. of both we serve encouraging at I demonstrations the XX-layer are are not lithium three metal I made today think full really, the cell think, in then LFP together,

Operator

queue. questions Presenters, on no And there you continue. are further may

Jagdeep Singh

in more we mentioned, high the today. provides agnostic, XX-layer the cathode believe time So we the everybody to that year. join results LFP we energy, this we to the about evidence I tracking our then out cathode demonstrates The a we shared it low-cost we're want system to cathode. result scale the and today. that low thank call is this that to earlier useful as fact And result into are excited leverage can Again, that taking cost turn plans made for strong well I cell

years, we further progress to quarters and going the all. to the coming focused are call. the earnings over We you on stay and on look next Thank forward task reporting ahead

Operator

And concludes Thank ladies call. this for and conference you gentlemen, today's participating.

disconnect. now may You

QuantumScape (QS) 28 Jul 212021 Q2 Earnings call transcript