Good day, and welcome to QuantumScape's First Quarter 2024 Earnings Conference Call. John Saager, QuantumScape's Vice President of Capital Markets and FP&A, you may begin your conference. Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's First Quarter 2024 Earnings Call. To supplement today's discussion, please go to our IR website at ir.quantumscape.com to view our shareholder letter. Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events, future technology progress, or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize. Actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. There are risk factors that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our shareholder letter, Form 10-K, and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be QuantumScape's CEO, Dr. Siva Sivaram, and our CFO, Kevin Hettrich. With that, I'd like to turn the call over to Siva. Thank you, John. At the beginning of this year, we laid out four key goals for 2024 to help investors follow our progress as we move from prototype to product: begin shipment of Alpha-2 prototype battery cells, ramp our Raptor fast separator production process, begin low volume B0 prototype production of our first commercial product, QSE-5, and prepare our Cobra process to support higher volumes of QSE-5 in 2025. We announced on March 27th that we started shipments of six-layer Alpha-2 prototype battery cells to automotive customers, which is the first of our four key goals for 2024. This is a key deliverable in our engagement with our prospective launch customer. The Alpha-2 prototype combines higher loading cathodes with our Flex Frame cell format and improvements to packaging efficiency, tighter internal margins, thinner current collectors, and a slimmer design. Alpha -2 is important because when combined with Raptor films and other refinements and incorporated into an approximately five amp-hour design, it represents the core of QSE-5. The Alpha -2 design is intended to serve as an effective demonstration platform for customers to preview important electrical performance capabilities of the planned QSE-5. Customer feedback is the most critical input in the product development cycle, as it provides insight into areas that need improvement and strengthens collaboration. In our shareholder letter, we published data on four key performance features of Alpha -2 cells. The first of these is discharge power, which relates directly to vehicle acceleration in high-performance applications. Alpha-2 prototypes are capable of up to 10 C discharge rates, which in a 100 kWh pack would be nominally equivalent to over 1,000 hp. We believe this translates to a compelling combination of energy and power compared to conventional lithium-ion cell designs. Second, fast charging is an important feature for EV applications. Improving on previous results, Alpha -2 prototypes have demonstrated the capability to fast charge from 10%-80% state of charge in less than 15 minutes. Third is low-temperature performance. Conventional EV battery performance can be significantly impaired when ambient temperature drops below freezing. Our cells have the potential to offer good energy density, and hence range, across a spectrum of operating temperatures down to -25 degrees Celsius. Last is the advances in applied pressure. As a reminder, some solid-state battery technologies can appear to deliver acceptable performance when put under high externally applied pressure. We are aware of various solid-state battery groups reporting cycling results using test pressures from 20 atm to as high as 750 atm. Such high pressures are impractical for real-world EV applications. In the Alpha -2 prototype, we have now reduced externally applied pressure to 0.7 atm within the range currently present in conventional EV battery pack designs, and we believe this allows us to integrate our cells into existing pack concepts. We continue to target zero pressure designs for consumer electronics applications. We believe the combination of these capabilities planned for QSE-5 represents an unmatched value proposition, and Alpha -2 represents an important step forward as we work towards ramping up our manufacturing capabilities and improving the reliability performance of our cells. Now, a word on our production outlook. Our current generation separator production process will continue to serve ongoing Alpha -2 sample production for customer shipment and internal testing in Q2. In parallel, increased production from the new Raptor process will allow us to gather larger volumes of cell testing data to validate safety and reliability improvements, accelerate process improvement of downstream cell assembly steps, and begin production of QSE-5 B0 samples. Most of the upstream and downstream automation equipment that serves the Raptor heat treatment equipment has completed or is undergoing site acceptance testing. The Raptor process has shown encouraging improvements with respect to certain critical to quality metrics. In addition to the planned Raptor ramp, we are also streamlining cell assembly processes by simplifying the bill of materials, consolidating process steps, and increasing automation to enable a smooth ramp of cell production. While supporting initial production of QSE-5 prototype cells, Raptor also serves as a learning platform for our next generation of separator production, the Cobra process. Cobra is intended to combine the fundamental process innovations pioneered by Raptor, with specialized equipment capable of realizing the full potential of fast separator production. The Cobra process is necessary to enable higher volumes of QSE-5 prototype production in 2025. Last, a word on our strategic outlook. We remain tightly focused on a singular goal: bringing our first commercial solid-state lithium metal battery cell to market for electric vehicle applications. Achieving this ambitious goal requires three major elements: differentiated technology, close customer engagement, and methodical execution of our milestones. On the first point, we believe the performance differentiation of our solid-state lithium metal technology continues to be clear, as successive iterations of samples have demonstrated. On the customer front, we are increasing our focus on intensive collaboration with our automotive partners, including our prospective launch customer. Finally, we continue to pursue a disciplined approach to product development and process deployment. While there is still significant work ahead of us, we are as enthusiastic as ever about our technology and its potential impact, and we look forward to sharing more details over the months to come. With that, I'll hand over to Kevin for a word on our financial outlook. Thank you, Siva. Capital expenditures in the first quarter were $14.1 million. Q1 CapEx primarily supported low volume QSE-5 prototype production targeted for later this year, as well as the Cobra process and other equipment as we prepare for higher volume QSE-5 prototype production in 2025. We maintain our full year 2024 guidance for capital expenditures to be between $70 million and $120 million. GAAP operating expenses and GAAP net loss were $131.9 million and $120.6 million, respectively. Adjusted EBITDA loss was $76.2 million in Q1. The table reconciling GAAP net loss and adjusted EBITDA can be found in the financial statements at the end of the shareholder letter. We maintain our full year 2024 guidance for adjusted EBITDA loss to be between $250 million and $300 million. This guidance reflects our efforts to maintain our commercialization timeline while conserving cash and extending our runway, primarily by focusing on process improvements. We ended the quarter with $1.01 billion in liquidity, strongly positioning the company as we transition from prototype to product and prepare for subsequent industrialization. We continue to be prudent with our balance sheet and reiterate our forecast that our cash runway will extend into the second half of 2026. Any additional funds raised from capital markets activity, including under our ATM prospectus supplement, would further extend this cash runway. Longer term, our capital requirements will be a function of our industrialization business model, which we believe could reflect a mix of wholly owned production, joint venture, and licensing relationships. Thanks, Kevin. We'll begin today's Q&A portion with a few questions we've received from investors or that I believe investors would be interested in. Siva, could you give investors any initial impressions after your first few months as CEO? John, it's been an exciting eight months since I joined QuantumScape. The first thing I want to mention is that the team at QuantumScape is extraordinary in the depth of knowledge they have in battery technology and science. Equally impressive is their commitment to the QuantumScape mission of revolutionizing energy storage. I've also been very pleased with the level of interest and involvement from the customers. The level of partnership and the customer intimacy is genuinely exciting. In terms of scaling the technology, I can see a lot of similarities from my prior experience in semiconductors to the progress that we need to achieve. I can see the path from where we are to where we need to go on defect density reduction, process variability control, equipment productivity, ecosystem development, et cetera. Finally, seeing the current headwinds in the EV market, I can also see how the fundamental thesis of the company is getting validated. Today's lithium-ion based battery packs will not meet the customer needs on range, charging time, safety, or cycle life of the battery, even given the downward price pressure and marginal improvements being made by the industry.... It's unclear that there is a path with the current technology to make the leap from the early enthusiasts to more mainstream car buyers. QuantumScape represents the next generation of battery technologies that we think are necessary to make the EVs a compelling choice for car buyers. Thanks, Siva. On the last point, you mentioned the macro environment and sentiment around EVs. Has any of that impacted QuantumScape's growth plans or customer conversations? Yeah. What we are seeing is that there is clearly some cyclicality in the marketplace. There are macroeconomic reasons and some geographic variabilities in demand. In addition, there are some manufacturer-specific trends as well. However, over the long term, the secular demand from the marketplace for EVs is undeniable. I see the interest from our OEM customers and the excitement about the progress of our technology. Having said that, we see that the automotive customers are still uncomfortable with the EV value proposition versus traditional combustion vehicles, especially in regards to the range and charging capability, given the current crop of offerings. A holistic battery solution that is strong on safety, great on the long-term life of the battery, along with a better range and faster charging times, is required. The variance in the marketplace of conventional lithium-ion batteries do not solve for all these trends, nor do we think the rate of progress in this 30-year-old technology capable of getting there. What we at QuantumScape have demonstrated so far is a step change from the current solution: solid-state, anode-free, lithium metal battery that simultaneously offers high energy density and high power density, along with improved safety and cycle life. We believe our technology platform will enable EVs to be a compromise-free choice for the majority of the mobility marketplace. Okay, great. Narrowing our focus to this quarter, can you explain how Alpha-2 fits into your big picture development roadmap, and how does this move us towards our ultimate goal of getting into series production? John, from a big picture perspective, the QSE-5, which is an approximately 5 amp-hour cell, is a product we are striving to deliver to our automotive customers. The automotive industry uses a series of major stages to structure product development, typically called A sample, B sample, and C sample, followed by start of production. We delivered A samples in 2022, and Alpha-1 and Alpha-2 are stepping stones to achieving B sample production by the end of this year. Alpha-1 was completed last year. Alpha-2, which we began shipping in the first quarter, has almost all the same characteristics as QSE-5, other than the wrap performance and the final cell capacity. This gives our prospective launch customer the ability to evaluate and give rapid feedback on the performance capabilities of the cell, so we can methodically iterate and improve. Great. Kevin, turning to you now, how does our current capital runway align with our product development roadmap? We ended Q1 with over $1 billion of liquidity on the balance sheet and reiterated our guidance of cash into the second half of 2026. Our balance sheet, we believe, is a competitive advantage and source of strength for the company. The capital in our forecast is being invested into things we believe create value. Finish the QSE-5 product, targeting approximately 800 Wh/L and 15-minute charge times from 10%-80% capacity. Develop and deploy our Raptor and Cobra fast processes that make our proprietary solid-state electrolyte separator. And install equipment to serve the small volume, high visibility program of our prospective launch customer, with whom we continue to closely work for the QSE-5 launch. We expect the capital efficiency to improve with subsequent facilities due to the operational benefits of larger scale equipment and process maturity, as well as due to business model and capital structure. Some of those options available to us are the use of traditional non-dilutive sources of funding, including debt, customer prepayments, and government incentives. In addition, we have the full opportunity set of business models available, including joint ventures and licensing. JVs benefit from the strength of the partner and reduced CapEx funded by QuantumScape. Licensing enables market penetration beyond the constraints of QuantumScape's balance sheet and operational bandwidth. Okay, thanks so much. We're now ready to begin the live portion of today's call. Operator, please open up the line for questions. We will now begin the question and answer session. In order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from the line of Joseph Spak with UBS. Please go ahead. Hi, this is Gabriel on for Joe. Thank you for taking my question. Just wanted to quickly dive deeper on some of the details regarding the commercialization roadmap. You know, you're ramping Raptor by the end of the year and getting Cobra up sometime in 2025 to get high volume B sample prototype production online. But once that's done, call it about half a year or so of delivering those B sample prototypes and another half year to a year for some final C sample stage, we're probably looking at full commercialization and gigawatt hour scale production sometime in that end of 2026, early 2027 period. Is that sort of the right way to think about this? Gabriel, thank you for the question and the overall picture. Look, we are always focused on both short-term deliverables and longer-term thinking. We are giving the street guidance on what milestones we need to deliver in the short term, meaning in 2024 and 2025, and make sure we hit them every time. We are working very, very closely with our prospective launch customer, and we probably will allow them to come and tell us when we can talk about it outside. So for now, the guidance we can give you is for all of calendar 2024 and calendar 2025. At the end of calendar 2024, we have done low volume B samples, and next year we're going to high volume QSE-5 B sample prototypes. So that's the guidance we have given outside. Understood. Appreciate the details there. And just as a quick follow-up, Kevin, my second question is related to the litigation expense you disclosed in your adjusted EBITDA bridge. Just generally, how are you viewing this on a go-forward basis? I mean, was this just a one-time line item? You know, how should we be looking at this? Yeah, thanks for the question. The net loss to adjusted EBITDA table found in the, at the end of the shareholder letter, includes an approximately $24.5 million expense for the net litigation settlement, accrual, and legal fees. This is associated with the agreement in principle to settle the securities class action litigation. The pending settlement, once finalized and if approved, would conclude what has been one of our most significant ongoing legal matters, as we've described in past annual and quarterly reports. The settlement is subject to final documentation, notice to class members, and preliminary and final approval of the court. Appreciate the color. I'll pass it on. Your next question comes from the line of Jordan Levy with Truist Securities. Please go ahead. Afternoon, all, and thanks for all the details. Siva, maybe for you to start. The shareholder letter mentions some streamlining of downstream cell assembly processes that include things like simplifying the bill of materials and consolidating the process steps and increasing automation. And I think this is in reference to Raptor. I'm just curious, are these all sort of changes that were already contemplated in the Raptor designs, or are these new developments you've been able to kind of point out as a means of process simplification, and maybe any details around that line in the shareholder letter? Jordan, I am willing to take credit for everything. Now, having said that, many of this were well planned, and, these were as Raptor, the upstream and downstream automation steps have been implemented, and they are going through site acceptance tests in some cases, and, cell assembly steps that are coming right behind. In all of those, we are being, very methodical. We go back and make sure we run enough of them so that we can get a decent amount of data to establish a baseline, make sure that we ensure that the process is robust, there is sufficient margin, and then try to automate them right afterwards. And this process continuously iterates and moves forward. Alpha-2, for example, is one such major step where we can get the samples, give it to customers, get their feedback, and then when we get towards the B samples at the end of this year, we'd have had one more revision of these. So we have done a good job of continuously streamlining steps of the process where we know are robust, automating them, and then moving to the next step. That's what you are seeing. Yeah, that makes total sense. Appreciate that. And then, Kevin, maybe just for you, and this, this may be related to that litigation expense you all disclosed, but, just seeing where, OpEx came in for the quarter, I'm assuming that might have been in there, so that might have been accounted for the step-up. But maybe just thinking more broadly, as you all get kind of Raptor and, and, you know, Cobra going, I know you reiterated your EBITDA guidance. I'm just, you know, curious how we should think about the shaping of OpEx. Does that change at all as some of these processes start to come online? Yeah, we did reiterate the adjusted EBITDA guidance of $250 million-$300 million loss in the year. You could think of it as broadly, slightly monotonically increasing over the year as we ramp up volumes of the QSE-5 prototypes. Got it. Thank you. you. Thank you for the details. Your next question comes from the line of Jed Dorsheimer with William Blair. Please go ahead. Siva, you have Mark Shooter on for Jed. Congrats on the first quarter as CEO. Just a question about the fast charging. I know that's key for EVs, and the data is pretty impressive from 10%-80%. I know lithium metal theoretically has better charge transfer kinetics than graphite, but in practice, it's hard to control that surface lithium to avoid, you know, your current density hotspots. So I'm wondering, how is cycle life impacted under the fast charge testing protocol you guys are seeing? Mark, thank you. Very perceptive question. This is something that we have repeatedly shown. We have data that we have demonstrated both in our sister cells and earlier on with our customer, talking about it with their data. That substantial number of cycles with charging that is much more than the normal fuel feed that a car would normally experience day-to-day. So we have shown substantial fast charge data and cycling together. The truth of the matter is, this has been one of our core innovations, making sure that that ceramic separator, along with lithium metal plating on the other side in an anode-free configuration, and doing it repeatedly over and over again at a reasonably fast charging cycle, has been our strength. This is one of the major differentiators of the technology, as you can see in all of the data that we have presented from Alpha-2 in the shareholder letter. So we have demonstrated that for you in prior data, and we continue to validate it. Awesome. That's a significant achievement. Thanks for the color. My next question goes towards Raptor, and I'm wondering if we could dig in a bit on the improvements. Do you see it as more so a cost and speed improvement for Raptor and Cobra, or are there other benefits, like potentially a thinner separator? Yeah. So Raptor and Cobra are clearly an order of magnitude for Raptor and another order of magnitude. We showed the data in the last earnings letter on the productivity advantage of the two. Raptor is better, Cobra is much better in terms of throughput and in terms of equipment footprint per unit output. That is very, very good. However, what we continue to see is, in the case of Raptor, some true, critical to quality metrics that are also, better on Cobra. We do expect that both Cobra and Raptor will continue to help us achieve our targeted energy density and power density that we've talked about. Great. Thank you very much. As a reminder, if you would like to ask a question, please press star followed by the one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your next question comes from the line of Davis Sunderland. Please go ahead. Hey, guys. Good afternoon. Thank you for taking my question. I know it's only been a month since you made the announcement, but just wondered if there's any feedback so far from a prospective launch customer, or maybe if not, any timeline on how or when this might be communicated? Yeah. So we have shipped the films to our prospective launch customer, as we mentioned in our press release. That data will continue to be customer confidential, including the entire test protocol. This is the reason we test in parallel in our own labs with sister cells, and we publish that data. We have shown the early results already in our earnings shareholder letter, where we do show the performance of these same Alpha-2 samples, which are the analogous corresponding sister cells that were shipped to the customer. Got it. That's very helpful. Thank you. And maybe just one more, if I could add a follow-up. Have you guys seen any changes in the level of engagement with potential customers, just as the excitement around EVs seems to have turned negative in the last couple of months, or lots of negative headlines, of course, but just how you guys are thinking about new partnerships, if there's been any change on that, on that front? Thank you. Yeah. I did talk about it in the earlier question that John was asking me on the scripted questions. The interest from the customers that we have been working with, they are the ones that we truly engage closely with, has been very, very good. There has been no letup in the level of interest or the level of commitment from our customers. We are continuing to work closely with our partners that we've been working with, and the overall secular demand thesis has not changed. Clearly, there is some short-term issues. Clearly, there are headwinds in the marketplace today. Clearly, as I was saying earlier, there is some cyclicality, there's some macroeconomic conditions, there is some geographic changes, there is some manufacturer-specific differences. But among our customers, the customers that we are working with, the interest on our technology, the commitment to our company, and the enthusiasm with which they are working with has remained unchanged. That's helpful. Thank you. Appreciate the time. As a reminder, if you would like to ask a question, press star followed by the one on your telephone keypad. At this time, there are no further questions. I will now turn the call back over to QuantumScape management for closing remarks. Please go ahead. Thank you. With that, I'd like to thank you all for joining us today. We look forward to sharing more on our progress in the coming months. Thank you.