QuantumScape Corporation (QS) on Q3 2021 Results - Earnings Call Transcript

Operator: And welcome to Quantum Scape's third quarter 2021 earnings conference call. John Zager, Quantum steeps, Head of Investor Relations. You may begin your conference. John Saager: Thanks, operator. Good afternoon. And thank you to everyone for joining Quantum Scape is third quarter 2021 earnings conference call. To supplement today's discussion, please go to our IR website at ir. quantumscape.com to view our channel Before we begin, I want to call your attention to the Safe Harbor provision for forward-looking statements that is posted on our website and as part of our quarterly update. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward-looking statements. For the reasons that we site in our Form 10-Q and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape's cofounder, CEO and Chairman Jack and our CFO, Kevin Hetronic. Jay, will provide a strategic update on the business and then Kevin will cover the financial results and our outlook in more detail. With that, I'd like to turn the call over to Jacques. Jagdeep Singh: Thanks, John. Welcome to our earnings call for the third quarter of 2021. Earlier today, we published our shareholder letter summarizing the major developments in the last quarter. I'd like to briefly describe a few of the highlights here. On the Q2 2021 earnings call, we disclosed that we submitted our single ourselves for testing an independent third-party lab. We can now report that the results from these tests replicate the impressive performance we first disclosed in our battery showcased presentation, in December last year. So that's carried out what we believe is the most automotive Grove and test for 800 cycles at 25 degree Celsius, 1c are in 1 hour charge and discharge rates, 100% depth of this charge and 3.4 atmospheres of pressure. This test is critical because an automotive battery cell, but simultaneously satisfy all these requirements missing even one vendors to sell inadequate for automotive applications. Another important news in September, we announced an agreement with the second top 10 global automotive OEM by sales revenue. This automotive OEM has already tested ourselves in their labs and the agreement calls for them to work with us to evaluate our batteries were inclusion into pretty series prototype vehicles and ultimately, pursue these production vehicle, long-held belief that customer contracts of the ultimate external testing validation. So it's encouraging to have this agreement with the second automotive OEM as confirmation of the compelling value proposition offered by our technology. This OEM has committed to purchase 10 megawatt hours of batteries from Q3's euro, our pre -pilot production line, contingent upon achieving technical milestones that are in line with our pre -existing technical development road map. As we said in the shareholder letter, although the potential near-term economic value of this agreement is in the high single-digit millions, we believe that steel represents a major long-term opportunity. And the cell development front, we saw important developments during the past quarter. In August, we announced the completion of our third key milestone of the year are for ourselves successfully demonstrating 800 cycles to more than 80% capacity at 1 hour charge and discharge rates and 25 degree Celsius. Today, we report these sales have now achieved 1000 cycles, well in excess of the commercially relevant target. Construction and development of 10 layer ourselves continues with encouraging results. The first-generation 10 ourselves reported in the second quarter shareholder letter displayed energy retention behavior similar to our 4 and Single-Layer cells, as well as cycling performance in excess of our expectations for such early sales, achieving over 300 cycles at a 1C rate. As we've said before, achieving our targets requires continued improvement of the quality, consistency, and throughput of our processes. Our testing at aggressive 1C charge discharge rates allows us to quickly than a fire potential refinements in cell design and construction dramatically shorten the development cycle and deploy improvements rapidly. Following the LFTB data we shared last quarter, we continue to improve our high energy density LLP cells with refinements to the capital material and manufacturing process. We believe combining LSP capitals with our lithium metal platform provides our OEM customers an opportunity to minimize active material costs and address the supply-chain issues while addressing the fundamental challenge conventional LP cell space, which is low energy density. For a deeper dive on LFP of lithium metal anodes, I'd encourage you to go to our website and checkout our September ninth webinar on LP batteries. From a manufacturing perspective, we wanted to lay out our scale up plants, which called for a staged approach with several generations of manufacturing lines, which include an expanded engineering line, a pre -pilot production line, QS -0. And our joint venture production line with Volkswagen. QS -1. Our engineering line is used for cell and process development, as well as production of near-term customer prototypes and expansion to this line will allow us to increase cell output, providing the test sales in the year to further accelerate our development program. We tend to use cure 0 to both produce more sales for customer use in 3 series test vehicles and prove out the processes that will be used in our gigawatt-scale. QS -1 production facility. This quarter, we finalized orders for large-scale heat treatment tooling for the QS -0 pre pilot line in close collaboration with our vendors and partners. These tools represent the core of our manufacturing capability. Finally, I wanted to say a few words about our strategic vision. As while our immediate focus remains on achieving our near-term goals, these near-term goal should always be understood in the context of this broader vision. Our Board of Directors recently laid out a series of ambitious targets for the Company to be achieved over the course of the coming decade, including cumulative delivery of 1 terawatt hour of battery cells, equivalent to the annual production of over 20 factories. the size of the Giga factory outside Reno, Nevada. Of course, we have a lot of work to do with no event. But our ambitions will not stop there. We believe that the once-in-a-generation shift electric vehicles combined with our transformative lithium metal battery technology, represents an extraordinary opportunity with de - carbonization as well as shareholder value creation. Extraordinary opportunity demands extraordinary ambition. With that, I'll hand it over to our CFO, A - Kevin Hettrich, to say a few words on our financial performance before we open up to Q&A. Kevin. Kevin Hettrich: Thank you, Jagdeep. In the third quarter, our operating expenses were 54 million, excluding stock-based compensation, operating expenses were 41 million. This level of spend was in line with our expectations entering the quarter. For the full year, we expect cash operating expenses, OpEx less depreciation, and stock-based compensation to be in the range of 130 million to 160 million, consistent with previous guidance. CapEx in the third quarter was approximately 39 million. For the full year, we now expect capex to be in the range of 135-165 million. On the Q2 earnings call we discussed 2021 capex tracking higher than 130-160 million primarily due to potential pull-in of some equipment spend from 2020 to into 2021. In Q3, our team secured shorter lead times for a portion of this equipment. We are consequently seen less timing-based shift of Q3's 0 capex spend from 2020 to into 2021. Capex actual are determined by lead times, order dates, and payment terms near year-end changes in these factors can move 1P payments either into or outside of the forecast period. We expect CapEx in 2022 to be significantly higher than 2021 as we continue to increase our engineering line capacity to support internal development and broader customer sampling, as well as to invest in our pre -pilot QS 0 line, consistent with our 2023 target of providing cells from that line for using tests cars. We'll provide more specifics regarding 2022 on our Q4 earnings call. With respect to cash, we spent 68 million on operations and CapEx in the third quarter, we expect full-year 2021 free cash flow burn to be in the range of 260-300 million. We continue to reiterate year-end liquidity guidance of greater than 1.3 billion. This quarter, our Company achieved progress on cell development, manufacturing scale-up, and prospective customer engagement while maintaining a strong balance sheet. We ended the third quarter with more than 1.5 billion in liquidity. We believe exiting 2021 with more than 1.3 billion in expected liquidity provides sufficient capital to achieve our key milestones, including fully funding QuantumScape through initial QuantumScape Production. Our GAAP Net Income for the quarter was 15 million, including the impact of 69 million in non-cash fair value adjustment of the assumed common stock warrants. Excluding this non-cash adjustment, the net loss for the quarter was approximately 54 million in line with our expectations. Lastly, this quarter we completed the redemption of all assumed common stock warrants. an important step that further simplifies and streamlines our capital structure. Consequently, beginning in Q4, 2021, we will no longer incur fair value adjustments related to these warrants. We're excited about the progress this quarter and look forward to the opportunities ahead. We'd like to thank our investors for supporting our mission to commercialize our solid-state lithium metal batteries and to help accelerate a mass market adoption of electric vehicles. With that, over to you, John. John. Jose Asumendi: Thanks, Kevin. We'll begin today's Q&A portion with a few questions we've received from investors over the say App and in our IR inbox. Our first question is actually a combination of questions that came in through the inbox. We've recently seen some new data from two of your competitors, and it's hard to tell the difference between your results. And there's why do you think QuantumScape is ahead of them? Jagdeep Singh: So the simple answer is, we have not seen any other data from any other lithium metal or solid-state player that needs to basic requirements of the automotive sector, which of course is to be able to cycle the 800 cycles at a 1c, 1c, i.e. one hour charge one hour discharge rates, at room temperature, i.e. 25 degrees Celsius, while retaining more than 80% of the self-capacity. And if you miss any one of these requirements, we don't believe that the battery is viable for automotive applications. Now, neither of the players you mentioned has been able to get us rate and needs requirements. For example, both have shown cycling data at sea over 5 rates, that's a 5 hour charge. In one case we should liquid electrolyte with lithium metal anode. This is likely because like previous attempts and all of these lines, their presentation slides showed they're seeing dendrites and lowering the charge rate is one way to reduce the incidents of such dendrites. In the other case which is a sulfide electrolyte with a carbon silicon entered. It could because the sell internal impedance is too high to support higher rate charge. Furthermore, any approach that requires lithium metal foil to start with will face severe challenges from a cost standpoint, given the cost of lithium foil and the manufacturing complexities of handling reacted lithium metal in the manufacturing environment. To finalize, to our knowledge, QuantumScape is the only next-gen battery player to have shown data that needs what we believe as the basic requirements of automotive application. Until acCompany shows data demonstrating their selves can meet these basic requirements, there might be other applications they can address. But we don't believe approaches because going to work for automotive applications. John Saager: Thanks. Our second question also comes from the IR inbox. Can you talk a little bit more about the significance of signing the second OEM, it seems like this is just an agreement for samples. Jagdeep Singh: So the significance of this is that this represents a second top 10 by revenue automotive OEM that is tested ourselves in their labs and confirmed that they are interested in building pre series and eventually series production vehicles. If our technology continues to meet the milestones laid out in the agreement, milestones that are along our existing development timeline. The raymond is to take ten megawatt hours at capacity from our QA0 pre production line, representing on the order of a 100 thousand cells, which is a really significant number that supports idea of evaluating this technology for free series and eventually production vehicles. We don't believe either side, we have entered into this agreement. If the intent wasn't to qualify this technology for use in production vehicle. If we successfully delivered the milestones and getting the surge production, this OEM has the volumes to drive significant revenues, UK landscape. John Saager: Okay. On the questions from the CEO, having entered into any material agreements with manufacturers other than Volkswagen? Jagdeep Singh: Yeah, John, I think we directly answered this question with our announcement of an agreement with the second top ten OEM this quarter as we just discussed. John Saager: Okay. Great. Do you have an estimated date on your first usable product for mass use? And what are the steps between now and then? Jagdeep Singh: As we've said, our target is to start production in 2024-2025 timeframe and in support of this, we're targeting having cells from our three production line, QS 0, in 2023. Between now and then, we need to do a few key things, continue increasing our layer counts, improving the quality, consistency, and throughput of our separator and some manufacturing processes. John Saager: Are EB's the only use case for your batteries or are you planning on entering other markets? Jagdeep Singh: John, our focus remains on electrifying the automotive power train, which we believe is the most significant market, both in terms of market opportunity as de - carbonization potentially. But having said that, given we're seeing strong interest from a range of other applications, and we believe our technology as we could add value in those sectors. And we would expect to also address those markets in the fullness of time. John Saager: Thanks. Do you have a sufficient amount of lithium supply secured to meet future demands? Jagdeep Singh: Interesting question because even though we use a lithium metal anode, we don't ever purchased any lithium metal. And this is because in our anodes-free 0 lithium design, 100 percent of the lithium in our anode comes from the capital. Remember that conventional capitals such as NMC or LSP, ship previously aided. And this is the same lithium that becomes our once those cells are charged up. So there is no other excess lithium required. Noted this is not the case for all lithium metal approaches as there are some that require a lithium foil to start and we believe those approaches will have a serious cost challenge to overcome. Also, turns out looking into the earth abundant material and in fact, our CTO ones calculated that there's enough lithium crossed the ship, tend to the nine long-range BV's pertained to 9 years. So flower lithium, obviously with some of our work required extracted lithium for the fact that that is there means that if demand does go up. Market mechanisms can close suppliers to extract more, I wouldn't be possible if it weren't as open limits. And finally, our strong relationships with some of the world's top automotive OEMs provide us an opportunity to leverage their scale and purchasing power to ensure our material supply. John Saager: Alright, thanks so much. We're now ready to begin the Q&A portion of today's call. Operator, please open the lines for questions. Operator: Thank you, John keypad. Again, just press star, and then the number one on your telephone keypad. And to withdraw your question just press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from the line of Gabe Daoud from Colin. Please proceed with your question. Gabe Daoud: Hey, good afternoon, everyone. Thanks for the prepared remarks and for taking my question. Jacques, maybe could we start with just manufacturing and any comments you could provide on improvements to uniformity on the separators since your last update and then maybe just remind us from a thickness stand point, how big? How thick is the separator currently as it 20 Micron and where do you have to get to? Jagdeep Singh: Hey, Gabe. How are you? Thanks for the question. So let me answer the second part first on the thickness of the separator. So we've said publicly that our separate areas in the tens of microns in terms of fitness. We've also said that the VW milestone that we had in Q1 that we reported on actually required that ourselves be in a commercially relevant thickness with a separator and commercially relevant area. And of course, we all know we met that milestones that we feel like the separator agent back that will be made in those dimensions. Relative to manufacturing and the questions you asked about uniformity and consistency and throughput. Those are exactly the things that we're working on. I would say that one data point on those items. So when you look at our progress from single last year to 4 earlier this year to ten. Let ourselves that we reported on for us in dry and then again today, that progress wouldn't have been possible if we had not been making steady improvement on all three of those metrics that you need in better quality. The film correlates with better performance in terms of everything from the current density you can handle those cycle life to the reliability of the films. Uniformity and consistency relates to how many useful film you get out of the given number of films that you start, and of course, throughput is the capability -- the capacity of the tools that you have and how many films you can make. And of course, as we make high earlier account films, we need to get a lot more capacity out. So ten there, every single tam needs ten times as many films as a single ESL. And it sounds obvious to say, but the reality is if you think about what that means for manufacturing line, we need to have either tools that have 10 extra capacity or 10 times as many tools and operators and so on. So the fact that we announced, we've moved from making singled ourselves afforded ourselves to turn themselves is indicative of progress on all 3 of those key metrics. Gabe Daoud: Thanks, that's helpful. And then maybe a follow-up on the manufacturing side. Can you maybe we're fine a little bit or just better describe the quarter Q4, dozens of layers that we need to get through next year for your 8 samples. As we are now in November, getting close to next year, is there anything that you can say to try to help us understand what that number could really look like. Jagdeep Singh: Yeah. I mean -- I think the actual near count as we've mentioned, the tasking is going to vary by automotive OEM because the their accounting tax, of course, though overall sell dimensions to South techniques for example. And that is going to be a function of the OEM specific module and TAC design. We said dozens of layers because that's -- they're all going to be in that general range. And I can also say, as I mentioned briefly on the call and in more detail in the letter, our manufacturing capability can be thought of as three phases. Currently will expanding our engineering line, that's aligned on which we are doing all the R&D development. The next phase, of course will be QS 0, which is the pre -pilot line that you know about already. And the final phase will be the production line with Volkswagen which we're calling QS-1. And so we are -- we need a number of tools for both engineering line and QA-0, particularly the long lead time tools. And as those tools continue to arrive and be commissioned and turned up, our capacity continues to increase. So the net of it is that we -- we remain committed to the goals that we had outlined in previous quarters, which is that in 2022, we hope to have samples to our customers that are few dozen layers in thickness in the commercial relevant form factor, that we call those customer prototype samples. And then in 2023, samples of roll-off, the pre pilot production line. And those samples in enough quantities to basically assemble pretty series test vehicles to . So those goals haven't, haven't changed. Gabe Daoud: Essentially, just morning one last one for me, just on commercialization and super early with this second OEM. But could you maybe just talk a little bit about what structure this could potentially look like over time, assuming they do become a customer upon commercialization, would it be similar to you're doing with Volkswagen? And then finally is this second would represent the only solid-state provider that the second OEM is working with. Thank you. Jagdeep Singh: Yes. So relative to the manufacturing model to supply this secondary it's a good question and the answer is it? There are two possibilities. We haven't yet decided which one and those two are either to be fully QuantumScape owned facility where we are. Simply a supplier to this OEM. And the other option of course, is more of a VW style joint venture where they're actually part owner in the manufacturing facility. We haven't yet made the final decision on -- on what the parties are going to prefer. But those are both viable options at the end of day. What I think they really care about is getting a sufficient quantity of high-performance sales to meet their needs. Relative to whether we're the only other solid-state Claire. I want to avoid aggressive that directly, Gabe, because we haven't disclosed a reality of the OEM. And I think that if we comment on the other partnerships than I think that starts to -- to narrow down the players. But more importantly, I think what we can say is, as you know, we don't believe we've seen any other solid state forward-looking and metal effort that meets even what we consider to be the basic requirements, right? Can you cycle for 800 cycles at 25 degrees at a one hour charge and discharge rate and we have seen that. So I think we feel comfortable that there's not a lot of viable competitive activity in this particular space. Gabe Daoud: Thanks, guys. Jagdeep Singh: Thank you Gabe. Operator: Thank you and your next question comes from the line of George from Baird, please proceed with your question. George: Hey, good afternoon, guys. Thanks for taking my questions. Maybe to start on the manufacturing side can you -- started to quarter or parts and production tools? you talk about any additional learnings that you've had in the -- in that process, I think you could share with us both positive and negative. Jagdeep Singh: Yeah. I mean, tons of learnings, not sure how much we can share. The tools themselves are a key part of what we're doing right now is of course, sort of tuning and tweaking various parameters on the processes, on the various recipes, process conditions to find the ones that produce the best results. So we're doing a lot of that work. We are working closely with our tool suppliers to specify the tools in a way if we think meets our needs. And in that process, there's a lot of earnings we've tried a lot of things that can be found. Didn't work as well as we thought, and other things that we found work better than we expected. So that process will continue. I think at the end of day, it's never a completely straight line, the real-world is never a straight-line anywhere. But the key is that you make steady progress over time towards your goals and I believe we're doing that. We're happy with that progress right now. One thing I would add, one thing to add to that, of course, is it part of the outcome of all this process of all their news we enhance our portfolio of he gets right, so trade secrets are, remember those innovations that we don't patent because the not discoverable by our competitors, so you can't take apart to sell, examine it. You can think about some examine it and determine things like the chemical composition of the materials and the physical architecture of the layout and so on. But you can't tell what recipe we'll use, in which gas is -- would solve into which temperatures and for how long to get those. I will come. So those are the kind of things that we keep us busy in all this work. We're doing on equipment evaluation continues to increase the fate SIFI portfolio, which we think is a good thing for our investors. George: Thanks. And then one more, just on the second OEM agreement that you signed, can you at least share? Was it a bake-off where there other solid-state in the mix as far as you can tell. And with regards to other testing that you're doing, are you aware of other companies in the OEMs that are also being tested, any anything you can share on the competitive environment would be appreciated. Jagdeep Singh: If you're talking to a top 10 automotive OEM, or you can pretty much assume that these guys, all these guys are exploring every possible, very often. They, they can because I would say effectively all of them are committed in one form or another to electrifying the powertrain. And as you look at the volume that ends up driving in terms of battery needs. It's just it's enormous. And so as a result of that, they are constantly looking not only for an already bolster their supply of current conventional lithium-ion batteries, which I'm sure you all about well in terms of all the current supply constraints in that space. But also next-generation batteries that can help them meet their products activeness goals, if you will, our view has always been, as you know, that while it's great to see governments actively try to encourage an EV industry for its de - carbonization potential that are in the day the product has to be attracted to the consumer. And I believe has been that until batteries get to be more competitive with the combustion engine, the product is going to be lagging. Combustion engine vehicles. And so we're seeing a lot of interest from a lot of these top OEM's around getting better batteries. They can help narrow that gap with combustion engines and a lot will be competitive with traditional powertrains. So I think you can assume that these guys have either looked at or evaluated every technology where they can get their hands on. And so they're trained as agreement to us with Flex a signal that decline free approach, which is in fact the most compelling in viable options they look at. George: Thanks else seem to advancing questions. Operator: Thank you. Your next question comes from the line of Evan Silverberg from Morgan Stanley. Please proceed with your question. Evan Silverberg: I here on behalf of Adam Jonas. First question for you guys. I know QS 0 is obviously more imminent in the future, but curious if you guys could give any color on QS Regarding site selection, location started construction. Initially, you guys have targeted a quarter of a gigawatt hour in 24, so curious if you guys still think that's on-time. Jagdeep Singh: Yeah, . So we haven't said anything additional other than the press release in 8-K that we issued earlier in the year on the site selection process. But I think the point you made is study the key point which is that the -- our focus in the near-term is of course on QS-0 and we feel like if we can execute on QS-0 then we will acquire the learnings that we think are necessary to have a smooth turnout of QS. And we don't currently believe that site selection is the gating item and turning up to us one, we think it's really around making sure we get the full process details and sort of blueprints, if you will, for a scalable pre pilot production line, which we can then replicate at U.S.1. Evan Silverberg: Great, thanks and one more. You shown the single layer, the forward layer and the 10 layers Now in the 70 by 85 millimeter size for the cells that you plan to deliver to OEM's in 2022, we'll that will they also be in that size or will you need to scale up to a larger size for that? Jagdeep Singh: Yes, that's a good question to . And so if you've noticed we used the word commercially relevant in many of our communications with investors and the public in general. And the reason for that is because the precise dimensions, again for every OEM, are going to be somewhat different. Because every OEM is going to need ourselves to be essentially an integral fraction of their module and tech dimensions. So another vehicle has exacting dimensions and so not every sale is going to get the same. However, it will be in that same general zip code if you will, on dimension. So. It might be slightly smaller in some dimensions, amenified the bigger, but it's not going to be multiple times smaller or bigger. That's why all the data we've been reporting this year starting with the batteries showcase last year, has been in the 70-85 factor because we believe that is the commercially relevant size range for these cells. Roughly the size of a deck of cards. Whether it's slightly bigger or slightly smaller, is going to depend on the specific OEM, but it will be in that general range. Evan Silverberg: Great. Thank you very much. Operator: Thank you. Your next question comes from the line of David Belle from Wolfe Research. Please proceed with your question. David Belle: Hi, everyone. Q - David Belle on for Rod Lache. Thanks for that presentation A - Jagdeep Singh just wanted to go back to earlier questions on manufacturing with yield being such a critical parameter. Could you describe to us what sort of libraries you're actually going to improve the yields. and improve the segments. Jagdeep Singh: So the three main areas that we've been work on and the ones I mentioned earlier, right. So one is some quality. So quality, you can minimize the quality as that's the uniformity across a given films. So the film has compositional variance or morphological variance, or any other variation across a given film, that will be lower-quality than film that's more uniform, it's higher quality. So that's one key. The second key area of course is consistency. And by that we mean hitting that high-quality repeatedly. As we every single time, as we run the material to our process. So what consistency translates to is really what you call a yield. If we can consistently make thumbs up given quality than the year will be higher. And then the balance thing is throughput, which is again, how many you can run through the process in any given year in the amount of time. Those three things are actually not uncorrelated. It turns out that as we move to more scalable tools for we've spoken about the fact that we're using these continuous flow tools to make our separator films. Well those continuous flow tools as we get into larger tools, they acquire more automation. because you have to be able to lower around all those films efficiently. Those high -- there's more highly automated larger continuous flow tools, not only give you more throughput, but they also give you better efficiency and quality because you have a tighter control over the process, better metrology in terms of seeing what's happening with films as they're going through the process. and so we expect to see continued improvements on all three things because they're not really completely on . David Belle: Okay. Thanks, Jagdeep and just tell me while yourselves. Could you describe to us is sort of throughput you have how many sales in making on a weekly or monthly basis? And what is the I guess, automated processing that you were able to use, are they analysis in terms of output, what we would see in the U.S. year align. And furthermore, how you've gone from one to four to ten layers. Can be challenging news in the capital electrolyte to become more difficult, or it hasn't been adjusted would be to do it with many layers as it is with one? Jagdeep Singh: Yes. So to your first question has to do with 10-years. We never disclosed the actual number of films ourselves that we make every time. But we are shifting the cells. Next year as you know, we've talked about shipping multiple, dozens of layers ourselves. And so we've keep on wasted, you got the keys to making that happen really are. One is you've got to get throughput up, so we get some more films to work with. Two is you've got to be able to get senior to get good quality consistency. So as we stacking storms up, they continue to work well together. If you have cameras in the sale and is one bad layer, then you have a bad sell. So consistency becomes important to produce more and more tender ourselves and we're working that. And then relative to the electrolyte in a capital-light, if you will The fact that we can make these ten theirselves and as you see from the acting charts in our net are affecting our performances, so similar to the cycling behavior. So similar to what we shared before, is an indication that there is no fundamental change to the capital-light separate reaction in the multiyear sale compared to what you see in a single year. David Belle: So thank you. And last one from these year, I just wanted to touch on this one. Terawatt hour target, which sounds really great and it's super ambitious. I just. Like you hear from you. What we are in fascinates us the market over the next 10 years. And how do you expect as we achieved this one terawatt hours, but whatever. Jagdeep Singh: I think it is an ambitious goal, as you said, it's the equivalent of 20 Gigafactories will produce in one year. But I think where they go comes from this belief that if we truly believe that we have a technology that is capable of delivering higher energy density and commercial sales. Maybe that 15 percent or more than capable of supporting faster charge times. That it's safer in many ways, because of the non-flammable separator. These are really critical selling points and if we can get this into mass production, we demand constraint. And so if we have the demand port then we should be able to build out our factories to earn meaningful share of the overall market for batteries. Now, we won't be mass production to until mid decades. Is it 25 time frame or so? So that didn't give us a lot of time to ramp up to a cumulative terawatt hour. But It's not impossible. It requires that we turn up giga factories that are of the size and scale of what -- what's currently being planned by many of the leading Valley manufacturers in the original gigafactories, probably on the order of 30 to 40 gigawatts. Many of the currently being planned Valley facilities on the order of a 100 gigawatt hours per year, right? So with five-years already gave up losing half a terawatt hour. So we don't think it's volume is impossible. It does require that we execute on getting this technology into mass production. And it does require that we be able to execute on turning up production facilities. But we believe the demand is there, we believe the fundamental technology has the capability to deliver on this, and if we can continue our execution as we have been doing, we think we have a real shot of pulling thoughts I think with that goal it represents is it's fundamentally a way to quantify what we've been talking about, which is we really want to make an impact in two ways. One, of course, want to create value for our shareholders. And the second thing if you want to play a role in the de - carbonization of the transport sector. And we think both those goals are served well by having aggressive, ambitious target of the type of these talked about. David Belle: Thank you, guys. Thanks for taking my questions. Jagdeep Singh: . Operator: Thank you. There are no further questions at this time. I will now turn the call back to Jagdeep. Please go ahead. Jagdeep Singh: I want to thank everyone for taking the time to join the call today. Obviously we're excited about the results that we shared. Independent third party testing was one of the things we've been hearing from and pending about from our investors. and we're delighted that the test data is extremely similar to the data we've shown in the past. And of course, the tests results we won under what we consider to be aggressive driving conditions in one hour charge and discharge, 27-3 Celsius, a 100% debt to discharge to 800 cycles to north of 80%, while so pleased with our results, developments on the customer positive as well. We're going to stay focused on these goals and tasks in the quarters coming. And we look forward to reporting on further progress on our next earnings call. Thank you all. Operator: Thank you. Today's conference has been concluded. Thank you for participating, you may now disconnect.
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The Electric Vehicle (EV) Sector's Recent Turbulence

The electric vehicle (EV) sector experienced a significant shake-up on Monday, primarily due to concerning news from Tesla:NASDAQ, a key player in the industry. Tesla's decision to cut a substantial number of jobs, as detailed in an internal memo from CEO Elon Musk and reported by Business Insider, sent shockwaves through the sector. This move by Tesla, aimed at reducing workforce redundancy and gearing up for future expansion, reflects broader challenges within the EV market, including a slowdown in sales growth amidst increasing competition.

The repercussions of Tesla's announcement were immediately felt across the EV industry. For instance, Asian EV manufacturer VinFast saw its share price plummet by over 9%, highlighting investor apprehension about the sector's prospects. Similarly, QuantumScape Corporation (QS:NYSE), known for its pioneering work in next-generation EV batteries, witnessed a nearly 7% drop in its market value. This decline is particularly noteworthy considering QuantumScape's financial health, with the company reporting a total asset value of approximately $1.5 billion against total liabilities of about $161.8 million in its latest quarterly balance sheet. Despite a strong financial position, with total stockholders' equity of roughly $1.34 billion and cash reserves of approximately $142.5 million, the market's reaction underscores the sensitivity of EV-related stocks to developments within the industry.

Furthermore, the EV sector's challenges were compounded by the departure of Drew Baglino, Tesla's senior vice president of powertrain and energy engineering. Baglino's resignation, announced via the Musk-owned platform X (formerly Twitter), marks the second high-ranking executive exit from Tesla in less than a year, adding to the uncertainty surrounding the company's future direction and its impact on the broader EV market.

These events collectively highlight the interconnected nature of the EV industry, where strategic decisions and personnel changes at a leading company like Tesla can have far-reaching implications. The sector's response, with significant share price adjustments for companies like VinFast and QuantumScape, reflects investor concerns about the stability and growth prospects of the EV market. As the industry navigates these challenges, the focus remains on Tesla for potential positive developments that could help stabilize and reinvigorate growth across the EV sector.

QuantumScape Corporation: Stock Update and Market Outlook

QuantumScape Corporation's Stock Performance and Market Outlook

QuantumScape Corporation (QS:NYSE) recently experienced a slight uptick in its stock price, closing at $5.98, which is a 1.36% increase from its previous close. This performance is noteworthy, especially when compared to broader market indices such as the S&P 500, which saw a daily gain of 1.11%. Similarly, the Dow and the Nasdaq also posted gains, but QuantumScape's performance managed to outshine them, with the Dow rising by 0.8% and the Nasdaq by 1.24%. Despite this positive movement, it's important to note that over the last month, QuantumScape's shares have seen a decline of 2.16%. This contrasts with the performance of the broader Auto-Tires-Trucks sector, which experienced a more significant loss of 7.62%, and the S&P 500, which actually gained 0.48% during the same period.

Investors and market watchers are now turning their attention to QuantumScape's upcoming earnings report. Expectations are set for the company to announce earnings of -$0.20 per share, which would represent a year-over-year growth of 16.67%. This anticipated improvement in earnings is a critical factor for investors, as earnings estimates and their revisions can significantly impact a company's stock price momentum. Currently, QuantumScape holds a Zacks Rank of #3 (Hold), indicating a neutral stance from the analysts. This ranking is particularly interesting because there has been no change in the Zacks Consensus EPS estimate for QuantumScape over the last 30 days, suggesting that analysts have not observed any recent short-term business trends that would warrant a revision of earnings estimates.

QuantumScape's position within the Automotive - Original Equipment industry, a part of the broader Auto-Tires-Trucks sector, also provides context for its stock performance. The industry is ranked at 151 by Zacks Industry Rank, placing it in the bottom 41% of over 250 industries. This ranking is significant because it suggests that QuantumScape operates in a challenging environment, as industries ranked in the top 50% are generally expected to outperform those in the bottom half. The Zacks Industry Rank is a valuable indicator for investors, as it reflects the collective outlook of analysts on the future performance of industries, based on the average Zacks Rank of the individual companies within each industry.

In summary, QuantumScape's recent stock price performance, upcoming earnings report expectations, and its industry ranking provide a comprehensive view of its current market position. While the stock has shown resilience in the short term, outperforming major indices, the anticipation surrounding its earnings report and its standing within a lower-ranked industry highlight the complexities and challenges it faces. Investors will likely keep a close eye on the company's earnings announcement, looking for signs of sustained growth and potential shifts in analyst sentiment that could influence QuantumScape's stock price momentum moving forward.