Company Overview

QuantumScape is a pre-revenue company developing next-generation solid-state battery technology for electric vehicles (EVs) and other applications. The company believes its technology will enable batteries with greater energy density, faster charging speeds, and improved safety compared to today’s lithium-ion batteries.

QuantumScape has incurred significant losses since its inception, with a net loss of $120.6 million in Q1 2024 and an accumulated deficit of $3 billion as of March 31, 2024. The company expects to continue incurring losses for the foreseeable future as it invests heavily in research and development ahead of commercialization.

Key Financial Trends

• QuantumScape is ramping up spending on research and development and the build out of its pre-pilot production line (QS-0) in San Jose. This is driving increased operating expenses and cash burn.

• Research and development expenses were $83.8 million in Q1 2024, up 9% year-over-year, primarily due to more employees and depreciation costs. This spending will continue growing significantly as the company scales up operations.

• General and administrative costs rose 45% year-over-year to $48.1 million, mainly due to a $24.5 million legal settlement accrual and higher professional/administrative fees.

• Cash used in operations was $57.9 million in Q1 2024 compared to $62.3 million in Q1 2023. Cash burn is expected to increase substantially going forward.

• Capital expenditures are also set to rise meaningfully as QuantumScape invests in property, plant and equipment for QS-0 and beyond. This will reduce cash balances unless offset by financing.

Financial Position

• QuantumScape had $1 billion of cash, cash equivalents and marketable securities as of March 31, 2024, down from $1.1 billion at year-end 2023.

• Based on its current plans, the company believes existing funds will sustain operations into the second half of 2026. Additional financing may be needed if plans change.

• QuantumScape has an effective shelf registration statement allowing it to raise up to $700 million more from public offerings as needed.

Outlook

QuantumScape is heavily focused on research and development at present as it works to ready its solid-state battery technology for commercialization. The company aims to increase energy density and manufacturing throughput while reducing costs.

Key upcoming milestones are the continued expansion of QS-0 to support customer sampling and testing, progress towards construction of a 1 GWh pilot production line in a joint venture with Volkswagen, and additional prototype deliveries to automotive partners.

If QuantumScape achieves its technical and cost targets in a timely manner, it will be well-positioned financially and strategically to capitalize on the fast-growing electric vehicle market. But the company faces risks around potential delays in product development and the transition to high-volume manufacturing.