Hello, thank you for joining us for the latest QuantumScape educational discussion about the importance of energy density. I'm Asim Hussain, Chief Marketing Officer here at QuantumScape, and today I am joined by my colleague, Will Hudson, our VP of Product. We're also thrilled to have a very special guest, Peter Joris, High Voltage Systems Concept Lead at Audi. Peter has a PhD in electrical engineering and has been with Audi for nearly a decade. His expertise has been key in developing Audi's next generation battery systems that will help support them on their path toward electromobility. Welcome, Peter, and thank you both for joining us today from Bologna, Italy. It's a great opportunity for both of you to be there at the same time for us to do this discussion. We're going to get a crash course on energy density from Will on battery performance, and then Peter will put this into context for automotive applications and share how auto OEMs are addressing consumer demands with next generation batteries. Before we get started, as a public company, I'm obliged to tell you that any type of forward-looking statements that we make, such as projections of our technology performance, are subject to risks described in our SEC filings. With that, let's get started with Will. Okay, thanks, Asim. It's certainly a pleasure for both of us to be here today. I'm going to start with a little bit of motivation. I think we're probably all aware that the automotive industry is undergoing a rapid transformation to electric vehicles. It's obviously a very exciting development. I think the last few years, in particular, have been exciting with the introduction of quite a few new EVs from both the established players, like our colleagues at Audi, as well as some startups. That being said, there's quite a long way to go. What this slide shows is that as of last year, roughly 90% of the cars that were sold worldwide still had a internal combustion engine. There's a long way to sort of come still to overcome this. It's our view at QuantumScape that the battery remains the main limitation to further electrifying the vehicle fleet. We feel that there are five key things that need to simultaneously be addressed in order for the battery and the electric vehicle to truly become mainstream. You can see those things on the right, and today, what I want to focus on is the first one, so energy density. We'll talk a little bit about what that is as a concept, as it relates to batteries, and how we can improve it. A little bit of background on energy density. This is an interesting chart, I think. It shows kind of the whole history of progress in terms of lithium-ion cell energy density. The curve that you see here represents kind of the state-of-the-art, so the best available cells each year, going all the way back to the founding or the first introduction of the lithium-ion cell back in 1991 by Sony. What you can see is a nice pace of steady progress that occurred for really the first two decades or more. Maybe that's not surprising for a new technology. There was lots of room for improvement. If you look at the last 10 years, this pace has sort of slowed. Right? We've reached kind of a plateau period where the technology is relatively mature, and it's becoming harder and harder to find sort of room for further improvement. Next, let me take just a quick minute to explain the concept of energy density as it relates to batteries. I like to do this with an analogy, so I'm going to use the analogy of storing energy in a reservoir above a hydroelectric dam. I have that pictured here on the left, and the way to think about this is that there's really two things that affect the amount of energy that we can store in the system. The first is the total amount of water, right? We just have a collection of water droplets or water molecules. The more we have, the more energy we can store. The second factor is the height, right? There's a distance between what we have at the top, the upper reservoir, and the lower reservoir at the bottom. Due to the force of gravity, we can use the stored energy of the water in the upper reservoir the whole way down as it cascades over the dam. Our battery, pictured on the right, is a lot like this, except that instead of water, we use lithium ions to store the energy, and instead of height, we use voltage. When we plug the battery in the first time, we would basically pull the lithium ions out from the cathode, which is like our lower reservoir in this case, and they would move upward to the anode or the upper reservoir, and they would be working against the voltage. Then when we want to use the battery to turn on a light bulb or power our car, we basically let those lithium ions fall back down. That's kind of the basic concept of energy storage. How about energy density? Well, there's two ways to think about this. The first is in terms of space. If we have a certain amount of energy, how much room does that system take up? This is what we call the volumetric energy density. We measure it in terms of watt-hours per liter, so going back to that earlier chart that we looked at. This matters for vehicles, maybe in an obvious way. We need a certain amount of energy to drive a certain distance, but we only have so much room in the vehicle, right? We can put those batteries maybe underneath the car, we can put them in the trunk, we can pick where to put them, but we have a finite space. The second concept here is the gravimetric energy density. This is the amount of energy that we can store in a given weight. It turns out this is also important for vehicles because the weight affects the driving behavior, it affects the dynamics, it also affects the efficiency, right? There's sort of a virtuous cycle. If we can improve the energy density, we actually get more efficient, and we can drive further, right? We need less batteries to go the same distance. These are kind of two related concepts that both matter for electric vehicles. Now to bring this back to the battery cell, again, I have a schematic of a, what we call a unit cell, so kind of the core, you know, internals of the battery system with a little bit more detail than last time. Here you can see a cathode on the bottom and an anode on top. You can see that these two electrodes are composed of various materials, what we call active material particles. Even though the lithium-ion is the thing that's sort of storing the energy and transporting the charge, it's typically or needs to be stored within some other compound. It turns out that one of the main limitations to improving energy density in today's lithium-ion batteries relates to the anode, so this top electrode in the picture. It turns out that we today use typically carbon or graphite, sometimes some silicon, and we need more of those materials than the lithium ions that we're trying to store. Just to use kind of the most common example, a graphite anode requires 6 carbon atoms for every lithium molecule, and that carbon brings extra mass, and it takes up extra space. If we could find a way to reduce or eliminate those components, that would help us improve our energy density. If we just come back quickly to our hydroelectric dam example, this would be as if our upper reservoir was filled with a bunch of islands. That's what I've tried to depict here. We can still store just as much water, but if we have a bunch of islands throughout the system, the lake, then you can imagine that it takes much more area to store the same amount of water, which is, again, storing our energy. What are we gonna do about this? This is kind of the, you know, QuantumScape's approach. If we look at the lithium-ion cell on the left, you can see what we think is a better, more efficient, more energy-dense architecture now on the right. We have a very similar cathode in this case, but instead of the graphite or carbon or silicon-based anode, when we assemble our cell, we actually have no material at all, and that's why we call it the anode-free lithium metal architecture. That's what's pictured in the middle. When we charge the cell up again the first time, we move those lithium ions from the cathode, that lower reservoir, up to the anode, but in this case, we plate them out as fully dense lithium metal, where all of the lithium ions are sort of in contact with one another. We have no islands, we have nothing kind of in the way. What this allows us to do is store the same amount of energy in less space, and also with less weight because we don't have the mass that would be occupied by the graphite or the silicon. That's kind of the approach. If we put some numbers to it, you can see on this chart sort of what that improvement, what that benefit can look like. What I have on this slide is two important properties. We have the energy density, in this case, the volumetric energy density on the x-axis, and then I added one other important property, which is the charge time on the y-axis. If you focus first, kind of in the left, the bottom left corner, you can see some real-world data points for recent state-of-the-art vehicles and the cells that they're using. I think the takeaway here is that in conventional lithium-ion cells, you can push the energy density sort of to the extreme. In that case, you may reach around 700, maybe 750 watt-hours per liter, but you'll tend to have slow charge times, right? Maybe you'll give up a little bit of power. On the other hand, you can take a different approach. You can relax the energy density a little bit, move towards the left, and you can have somewhat faster charge times. At the end of the day, there's sort of a frontier, is the term that we use for it, that you can't get beyond. The only way to get beyond this frontier is to use new materials or new architectures. Something like this anode-free lithium metal solid-state approach that QuantumScape is using. If you look up to the top right of the chart, you can see two new frontier curves. What we have in the dark green is a curve that represents QuantumScape's initial 5 amp-hour, what we call our slim format cell. The idea behind this cell is that it can simultaneously have both more energy density and faster charge time than the best available cells on the market today. In the light green, we have another frontier curve, which is even further out, and this is what we might expect from a slightly larger format cell that QuantumScape is gonna work on in the future. I want to end here and hand it over to Peter. I think he's also gonna present this slide, and then, you know, we'll go from there. Thanks, Luke. I think you summarized it quite well. What, what are the demands from the OEM point of view, yeah? What, what are our biggest challenges, yeah? It's gravimetric energy density, it's volumetric energy density, it's charging time, and of course, the cost issue. Here on this slide, you see coming from the Audi e-tron towards the PPE platform, what has been the results of our development. You see it always come from the cell. I don't want to go too much into these numbers, but you see the increase in energy density, 15% on cell level, 20% on module level, and 30% on pack level. You see the plus in charging time, so we get faster for charging, and also the battery costs decreases up to 15%. As you said, yeah, we are heading towards a plateau. When you look at conventional cells, we are the benefits or the increases in energy density gets lower and lower. The QuantumScape technology is really a step function towards the higher energy density. Yeah, other possibilities, of course, are to increase the amount of silicon, for example, and so on. The values you named are quite in the right range, yeah, 800, 700 watt-hours per liter, 15 minutes, up to 25 minutes. It's always this triangle of energy density, fast charging, and lifetime of the cell, which you can shift, but you cannot have everything. Yeah, quite good. Yeah. Thanks, Peter. Will and Peter, you know, I think maybe where we could start is, could we talk about, you know, why the lithium-ion has sort of advanced the way it has with the conventional cells, and what's the point at which, you know, there's a reason for the plateau, but there's been significant advancements? Maybe we could start by talking about what those advancements have been, a little bit in terms of. Yeah. what they've been able to do. Yeah, no, I think that's a great question, and maybe I'll start on this slide. There's a number of factors. We talked about a few of the things that can, you know, that affect the energy density, but we didn't talk about all of them. If we refer to the schematic on the left, right, for the conventional case here, basically everything that's pictured will contribute, right, to the final volume and the final weight of the system. 30 years ago, when lithium-ion cells were introduced, the current collectors were thicker, for example. The separator that's in the middle, which we haven't talked a lot about, was thicker. Some of the things that aren't pictured here would be, you know, the space that kind of goes around the stack before it's put into the cell package, the size of the terminals, the head space for the terminal connections to be made. In those early days, those things weren't optimized. Some of these kind of, you know, design parameters, the peripherals, if you will, affect the end, you know, figure, and those can all be adjusted. That's one factor. I think another factor relates to the active materials themselves. Yeah. We've gone through generations, and I think, you know, Peter, in the, in the automotive world, you've probably seen, from, for example, if we take the cathode, initially, lower nickel content, maybe it was one third, one third, one third or something in the early days, and now you're seeing it move upward. Yeah ... 60% or 80%. There's some things on that side that also affect the end numbers, but you can't go infinitely far. Also on system level, it always has advantages and disadvantages. Yeah, going higher with the amount of nickel, that makes it harder to control the system in terms of thermal propagation, for example. Getting the cells bigger, getting the modules bigger, it's always you have always to look at it on a system level, yeah? The advantage advancements in on cell level does not always pay out for the system. Yeah, that's a good point. I mean, batteries are all about trade-offs, and we've found some ways to, like, reduce the trade-offs, but maybe not eliminate them entirely. Yeah. Yeah. As we're reaching that limitation, what are the lithium-ion batteries missing, so to speak? You know, in terms of what kind of energy density you need for the next level, right? I think we've have a number of long-range vehicles out there. We also have vehicles that can fast charge. Maybe we could talk a little bit about some of the data points on that performance frontier. Will, around, you know, as we look at some of the examples here, what are some of the trade-offs that, you know, we're considering as a, as a battery maker, you know, from a QuantumScape perspective, but also from Peter, from an Audi perspective, as you guys look at these things and look at the models that, et cetera, that you have, how do you begin to consider those trade-offs? I think from an OEM point of view, there will be always the need to make the system smaller and to make it lighter, yeah? In terms of the CO2 footprint from cradle to grave, it's super important to have a very, very light vehicle. Now we look at vehicles where one third of the weight, at least, from the vehicle is just a battery system. This work will never stop to get more into gravimetric and volumetric energy density. Of course, as I explained, there's always trade-off between energy density, charging time, or, you know, resistance and lifetime of the cell. You can adjust it towards maybe batteries which have a little bit less energy content, but you can super fast charge them. I think in the future, when the infrastructure is established, maybe this will be a way also to reduce the CO₂ footprint in total. There will be always cars which have the demand for long range capability without charging. It really depends. Maybe high performance cars will go for more for fast charging, because then you have also the opportunity to decharge quite fast. That's quite a good fit. The other cars, there will be always the need really for cars with very, very long range. This will never stop, there is not a number I can say today, like, "Yeah, 750 watt-hours per liter is enough for our customer." It will be never enough, not just for the vehicle developing companies. I mean, this is to store energy in small space with really a small amount of material, with a good CO₂ footprint for the product, will always be a big challenge. Right. Peter. And maybe- Just wanted to follow up on that. You're talking always about these trade-offs. Maybe, you know, you could talk a little bit about how do you assess what may work for different models, you know? 'Cause, for example, people think, you know, this is solving one equation, but the reality is that you have different needs based on different profiles of the type of vehicle it is, right? Maybe you could talk a little bit about how you guys think about that at Audi as you think about the different model line-up that you have. There will be, of course, in a big company like VW Group, there will be different chemistries for different cars. You will have a cost-optimized chemistry, you will have a best-in-class chemistry. As I told, as I explained, maybe for high performance cars, you will go more into the power region and, for long-range cars, more into the long distance or energy density region. Also, this, I told, like, the battery system has, like, one third of the whole vehicle weight, but it has at least one third of the whole vehicle cost. This cost optimization is maybe the third dimension in this, in this equation. Great. You know, I think, one of the things, Will, that we hear a lot, you know, of course, energy density is important, but just, you know, for example, you guys are contrasting there's sort of the trade-off between charge time and energy density. I do want to bring it back because you hear a lot of different, you know, numbers thrown out there in isolation, but there is an and aspect to it, whether it's charge time or other variables. Will, could you just touch a little bit on how you have to bring this all together versus it being just a single data point? Yeah, sure. You know, we didn't really talk about where this trade-off comes from. I don't want to go into a ton of detail, but I can maybe quickly explain that. You know, the way to maximize energy density in the cell, any cell, whether it's a lithium-ion cell or a QuantumScape cell, is to have as much active material as possible and as little of everything else. If you take a look at either one of these stacks and just imagine that we were to expand the thickness of the electrodes, they would be relatively thicker, take up, you know, more of the space and the weight compared to the current collectors and the separator, the non-active components. That helps for all systems. The problem with that is that when you make things thicker, it slows the system down, right? We have to move the lithium ions further, and we get less power. That's why we always have this trade-off, and we have these different frontier curves that you see now on this chart here. I think to try to answer your question, what QuantumScape is trying to do is develop a product that reduces the compromise. I don't think it's appropriate to say that we can eliminate the compromise, 'cause that's not possible, I don't think. If we can produce and deliver a cell that is both faster charging and higher energy density than what's available today, obviously, that helps. For sure. As Peter also mentioned, that's gonna be just the beginning. They're gonna keep asking us for something that's better. Oh. For certain vehicles, they'll say, "Guys, in this case, our customers want it to charge really, really, really fast. Please prioritize that." In other cases, they're gonna say, "Guys, we need 600 mile range" or whatever, right? "A 1,000-kilometer range. Please prioritize that." That's where we can start to make a choice, right? Right. Do we go towards one side of the spectrum or the other side? We'll just, you know, to build on that, It's a very exciting time at QuantumScape, where we now have, you know, a projection of our first product in terms of the 5 amp-hour cell that's on this slide. Maybe you could compare and contrast a couple of data points there, just to, as examples. As we're looking to, you know, further take these to market in terms of what might be the end result, depending on that trade-off between energy density and charge time? Yeah, I'm happy to, I think it's probably worth caveating that lots of factors, not just the two on this chart, would go into a decision, right? When you're making a cell. Here we show the charge time and the energy density, but we talked about cost, there's lifetime- Lifetime. There's safety, there's many, many things. I'll put that out there first. In terms of the, the numbers that you can see on the slide, we've got a handful of kind of, you know, state-of-the-art leading vehicles here. Down in the bottom right is the pickup truck from Rivian, and they're using a 21700 cylindrical cell. Because it's a big, heavy car, they really had to prioritize energy density. This is the one that's the furthest to the right on the chart, on the, on the whole graph, right? It also is the slowest charging. You go all the way to the other end of the spectrum, and you see a different approach, right? This is the Porsche Taycan cell. You know, we know from their public statements and from speaking with this team, that they prioritize performance and charge time. I think they're still leading in the marketplace in terms of those two things, at least near the top, but they had to give up a little bit of energy density in order to get there. You can see the numbers right there, I think, charging in about 17 minutes today, from 10% to 80%, which is quite fast, but it's a, you know, low to mid-600 watt-hours per liter cell. Again, what QuantumScape will try to do is beat that charge time and deliver more energy than this Rivian 21700 cell. Right. On that, you know, If you look at the curve for the 5 amp-hour cell, what would be the contrast for optimizing for range versus the optimizing for charge time? Yeah. You know, I think with that format, we have choices to make still, right? About which side of the spectrum do we wanna be on. I think you can sort of read it off the graph, but you get into the mid-800 watt-hours per liter range if we're willing to accept, you know, something like 15-20 minute charge times. If you wanna push towards 10-minute charge times, that's something that the system is capable of doing, but you have to give up a little bit of energy density, and you'd come back into the 700s. I think that's probably, you know, the way to look at it. Great. Peter, as you guys think about the future and what is important, you know, as you guys are building your electrification, you know, electrified fleet and what performance you expect, how do you guys begin to think about these next generation batteries coming to market, whether it's QuantumScape or others, you know, in terms of what that allows you to do, as you look to the future for your systems? Of course, we are also looking to convert. In those cells so far. We, as everybody, there's the opportunity to increase the amount of silicon to go further with the energy density and also to lower the charging time with silicon, but you will get this swelling problem. You will get trouble with the third dimension lifetime. So you have to handle the swelling problem in the system. We have a lot of good ideas also to optimize all of this on system level. The system is also, it's quite a very, very exciting time because nobody knows what's the final battery system of the future. There are a lot of optimization on cell level, system level, and also on battery, or cell level, module level, and also on battery system level. Of course, we are looking forward to this next step, yeah, coming out from the conventional lithium-ion technology to solid-state batteries. I mean, every OEMs is looking at solid-state batteries, and QuantumScape's approach is very straightforward, yeah. It's the all-in approach, which really shows these nice numbers. Everybody will love it if I could have the cell now, and put it into the car so far. Of course, we are looking at this, yeah. It would give a big benefit to our customer in terms of range, in terms of also design. The volumetric energy density also makes something possible, like maybe cells which are less higher, and our design will love it to have 10 millimeters less higher car, because it completely looks different. We are really excited to work with such cells in the future. Great! Well, Will and Peter, thank you so much for joining us from Italy to make this work. You know, I wanna thank you guys for working through the discussion and all of my questions. You know, as a component of the educational discussion, you know, that QuantumScape, we're gonna be doing a series of blogs on energy density, as well as trying to broaden this conversation about what that energy density means in different types of applications. Those blogs, for all of the folks who are watching this, can be found on our website, as well as they will be linked through the YouTube description below this video. This was a great conversation. We hope you all had learned something new, and hope you'll join us again soon for the next set of talks. Thank you so much. Thanks, Asim. Thank you.