Good morning, everyone. Thanks for joining us. So I'm Ben Kallo. I cover sustainable energy and mobility. Very happy to have QuantumScape, the CFO, Kevin Hettrich, here. I think we're going to do a fireside chat. This is what your fifth Baird conference, industrial conference? Thank you for inviting us. You all do a fantastic conference here in Chicago. It seems like five years ago, commercialization was so far away. Yeah. It's creeping up on us. That's right. So maybe, since we have an audience with different backgrounds on QuantumScape, if we could just spend a minute just kind of giving an overview of the company, how it was started, when it went public, and what you guys do. Good morning. Thank you again for having us. QuantumScape is a company working to give the world significantly better batteries. Things that you'd care about would be energy density in the world of automotive. That would be range. Power, which would be charge time. Life, safety, and cost. In order to do things and to give a significant improvement to all those dimensions at the same time, we believe you need a different chemistry. Specifically, QuantumScape is the world leader in solid-state lithium metal chemistry that targets advantages on all five of those things. It's been a very good year. About a year ago, we announced that we were shipping prototypes of our first product, the QSE-5. The specs on that cell across power, energy density, and safety, which is unmet in the marketplace, are 844 Wh/L, 301 Wh/kg, and it charges in about 12.2 minutes from 10% to 80%. And then just two months ago, those cells powered a Ducati race bike across the stage in the Munich Auto Show. It was one of two showcase exhibits featured by VW during the week. That was a very emotional moment for the company to have gone from, can the materials even exist to make the chemistry work, to having announced our first product, to then powering a vehicle. That was done with Ducati. Audi did the pack. And then together with our partners, VW PowerCo, we provided the cells. So there's a lot of momentum behind the company in the last period. That's great. You touched on it, but could you just maybe give a little bit of contrast versus traditional lithium-ion cells? So, acknowledging it's in the morning. For you, I'll keep the chemistry brief. Batteries have two electrodes. They have an anode, and they have a cathode, the separator in between. How they work is when you charge them, you move the lithium ions from the bottom, the cathode, into the anode. When you discharge them and you want the energy back out, you move them back down. Why it's called a lithium-ion device is in the anode, that thing on the left, the cells in a charge form store them as ions. That's a mixture of graphite and silicon. Think of it kind of like a little hotel or a host for those lithium ions. What we're working on is the schematic on the right, where as manufactured, there is no anode. There is no host material. And when you charge it, you end up plating pure lithium metal. And you can see the benefits there. By not buying or making anodes, that's a cost saving. By not having the material there, that's volume and a weight saving. If you're a little ion that needs to go from one side of the device to the other, we just cut the distance in half. That's where the charge advantage comes from. Life is improved because one of the major sources of life loss is in that anode structure with which we just eliminated. And safety, the separator that we replace and the anode is also infused with a flammable liquid. We eliminate all those things and replace them with either nothing, in the case of the anode, or our ceramic part, which is an inorganic material and doesn't burn. So that's where the safety benefit comes from. It's simple in a schematic. The engineering is devilishly hard. It required developing material as well as how it's made. Just for some little fun details, that material is less than the thickness of a human hair. Almost nothing on the periodic table is stable to lithium metal. So we had to develop a material that was stable to it. And by the way, you're passing a metal through a ceramic sheet, a solid through another solid. So the engineering there is pretty fantastic. And because of the realities of the automotive market, you need to work with earth-abundant materials that can hit the cost point. And you're talking about football fields and football fields and football fields' worth of this material given the size of the end markets that we're talking about. I want to get to some of the supply agreements too in a bit. But maybe you could talk about just because I think you touched on it, you had to invent the equipment. So could you just talk us through the Cobra, Raptor, or Eagle? Yeah. We have a soft spot for fast animals. So we've used animals to describe some of the different production technologies. So taking maybe one bigger step back, we are a technology licensing company. Our job is to develop better batteries, take it to a pilot line level of scale to demonstrate how it's made, and then to transfer it to our partners who would then take it the rest of the distance. Our first such licensing agreement was with VW PowerCo. VW Group and PowerCo is their battery unit. So to your question, Ben, you're asking about some of the different production line improvements. As I alluded to in the opening, it's not enough to have the world's most compelling performance in terms of power and energy density and safety. We also need to be able to make it cost-effectively. So that required an innovation in terms of how you make ceramics. So we started across the life of the company used to make it in terms of batches. That's nice for R&D, not suitable for manufacturing. Shifted to how the industry does continuous processing of ceramics. And then decided, well, you could scale that up. It's actually lower risk to continue to innovate on that process. And the vector that we pushed on was speed. So by taking existing equipment, we worked with the manufacturer to, without changing the equipment itself and just not significantly, small changes to the equipment, we baselined our Raptor process last year. That was an 8x improvement over the heat treatment speeds with which the industry does. With that as a positive signal that that was a vector we could work on, we did some proof of concepts in parallel to an even more to kind of fully use that speed lever. We did need to change the equipment itself. We worked with another manufacturer to do that. That led to the Cobra process, which is a 25x improvement over Raptor. You put those two together, that's a 200x improvement over that industry equipment. We've been talking with many of the world's leading ceramicists. We did not think that Cobra process was possible. So that is both important for our scalability and was also a really exciting thing that led to some partnerships with some of the world's leading ceramics companies in Murata and Corning. Both the opportunity to participate in making our separators and supplying them to some manufacturers like PowerCo is interesting, as well as that innovation in Cobra is very interesting to them for advancing the IP within the ceramics industry. I want to get to this, but first, because you mentioned that it's important, the licensing part of it. Can we start with Volkswagen and the relationship? And then I don't know if the correct characterization is a pivot to licensing, but how you made that decision to become a licensing company? So if you'd back up to 2018, we had formed a joint venture with Volkswagen. Volkswagen said, wow, we've never seen solid-state lithium metal chemistry work at automotive rates of power. This is a real breakthrough. We very much would love to put this in our vehicles and have a differentiated powertrain. Since that point, VW went further upstream and invested in a wholly-owned battery company called PowerCo. Given they went that direction and said, hey, we've put factory steel in the ground, we would love to give, why don't you let us spend the money? We'll help you industrialize the technology. Instead of as JV partners, we'll literally do it as PowerCo. And the benefits for investors in QuantumScape is that helps us achieve a true capital-light approach. We focus on innovation. We provide leading kind of chemistries and products. We take them to a pilot line scale from which we can teach partners, and then the VWs and PowerCos of the world would then take it the rest of the journey from there. There are three inflows into the company as a licensing company. The first would be payments from our customers during that collaboration phase where they're doing custom development or they're kind of purchasing, increasing maturities of demonstrations on that development. The second would be licensing, where our technology is being used in cells produced out of their factories, and then the third would be value sharing from the ecosystem itself, so last summer, we announced our collaboration licensing deal with the VW Group. It created a joint team in San Jose to bring up that pilot line, which is making nice progress. It was an 80 GWh license. That's about a million vehicles, which on successful transfer they would produce out of their factories. It's a non-exclusive license. We see this as a template that we'd like to recreate with others. And it was upgraded this most recent summer to include up to $131 million of payments by the VW Group to us as we're doing that development work. And those are kind of the main pieces. There's a royalty prepayment for us to earn of $130 million. If you sum those two numbers together, there's up to $261 million to earn in advance of that license being struck and, in fact, with that license being struck. So that's very significant economics upfront. And the licensing, by the way, is by far the larger economic opportunity. So VW and PowerCo is kind of our anchor tenant to the ecosystem. Because we have a capital-light approach, we wanted to work with the world's leading ceramic companies to create a mutually beneficial business case by which they could supply separators and provide it to those cell manufacturers. On the expansion of PowerCo, could you just talk about the significance of that? And I think there was some nuance there too where maybe it allows you to sell outside of automotive. That's right. So as part of the expanded deal this summer, which was just a few months before that IAA automotive show, their total license went from 80 to 85 GWhs, which is an expansion. What's interesting about that last five GWhs is they have the ability to sell it beyond the Volkswagen Group. So it could go elsewhere in automotive. They also have the ability to sell that outside of automotive applications. So for PowerCo, it gives them some strategic flexibility in terms of where to take this solid-state lithium-ion technology. And then just, there's other companies like Rivian I covered as a Volkswagen partnership. Could you just talk to Volkswagen's? We've seen a lot of U.S. OEMs retrench away from batteries. Just their commitment. And then maybe just when you guys have talked about commercialization happening. Yeah. Two great questions. So in the news, there's a lot of malaise and hand-wringing about the EV space. And while projections have come down incrementally, I think it is informative to look at the numbers. There's about 1.6 TWh of kind of mobility tied energy storage today. That's forecast to grow about 4x to just under 6 TWh globally. If you eliminate China, it's actually a more rapid growth. It goes from about 0.4 TWh to something like 2.4 TWh. So it's about 6x growth. So automotive alone remains an explosively growing space that is already massive and only becoming more massive. The OEMs tend to look across product cycles. And what we found in our conversations is that in times where they're trying to elbow each other out for a little more market share maybe, they want a differentiated powertrain, especially in their performance segment. In the event that it's growing like crazy, they still want that differentiation. In the last quarter or so or two quarters or so, you can see that momentum. We had that expanded deal with VW PowerCo, which features up to $131 million of payments. We upgraded one of our other kind of global OEMs from a technology evaluation agreement to a joint development agreement, which has payments tied to it for custom development. And then we said on the last earnings call, we have a top 10 global OEM who we had not engaged with, we're now in very active engagement with. So we've, through this, have seen continued kind of urgency and excitement over our technology. On the new customer agreements outside of VW or new prospects, is there a wait-to-see approach for what PowerCo does or people are going to move? They've already seen it. They can, under, of course, NDA and with the right relationships, they can come and see it at QuantumScape and receive samples of the cells. Any individual OEM represents such a massive economic opportunity. Like with VW, that's a million vehicles, and those are very large kind of factories at full scale. We'd have the ability to work with a handful simultaneously, and it's our intent to take this VW-type deal and to get into a cadence of striking these. First on the QSE-5 generation of technology and then ultimately as we progressed on our roadmap. As As a technology licensing company, it's to just have a platform license, license, license, platform license, license, license, and that's what success looks like. Again, just for our benefit, could you just talk about A sample, B sample? And then you guys shipped B samples, a big milestone. And just maybe talk through the significance of that. In automotive qualification, there are three phases. A is show off most of the benefits of your technology. It doesn't really matter how it's made. B means, in fact, a final B is you've got all the performance of the product and it's being made on production-intent processes, but with smaller equipment. That's a really important milestone because you're able to hold and touch and test the product. It's typically in this phase where you do modules and vehicle testing like you saw with Ducati. It's off of this that a cell supplier would get a purchase order. Then the C sample is replicating the B sample, but just off of the actual factory in the actual without changing the processes. It's just larger scale equipment. As a technology licensing partner, you can think of our pilot line as producing B sample type cells. It's ultimately our partner's job, the group taking the license that would take it through C sample and into full production. Let's move to the ecosystem now because I think it's important, and I don't necessarily know if I even fully understand how big it is, so you have Corning and Murata. Could you talk about each of them and what those relationships mean and what they provide to you guys? In our technology licensing business model, it's not our core strength to build factories or to operate them. From an investor point of view, you have to tie up capital early and you get returns once the factory kind of comes to scale. We think it's a better return on shareholder capital to innovate and to empower others who are specialized in that to use their balance sheets and their expertise to do that. So if you play that out, you have VW, PowerCo taking the OEM and cell manufacturer relationships over time. We'd like to add to both columns. And we've given investors a pipeline into our progress advancing those customer relationships along. But then important is, well, who makes your core part, this ceramic separator? Murata is the number one precision ceramics manufacturer on the planet. Corning is probably not that far behind. Corning is famous in both glass and ceramics. If you could choose two partners to have in the world to make your component, it's probably those two. What we are excited about, we hope investors are excited about too, is that itself, that the interest in that manufacturing from leading experts in ceramics should be a vote of confidence from a new direction from those who like ceramics and who are experts in ceramics. But for us, from the ecosystem point of view, the goal would be everyone finds a very nice business case. We provide the innovation. We train off of the pilot line. And our investors, we get the collaboration payments, license payments, and then value sharing from ecosystem partners. From the cell manufacturing, they're excellent at making electrodes and assembling cells. And they today buy the separators. They can maintain that same expertise. And they have a global partner from whom they're used to sourcing automotive quality and quantities in Murata and Corning. And then the fact that you have a license and you've got a turnkey supply chain only makes the value proposition to move forward more compelling. And then from a Murata and Corning point of view, without having done any R&D, there's a product that uses a core ceramic thing that they're good at, that they're being given the intellectual property with a captive kind of customer on the other side. And their balance sheet and know-how and expertise we think actually helps come down the cost curve over time. So that's the goal is that everyone finds a really nice economic opportunity. And it's all set up because the differentiation of the cell is so strong that it enables nice business cases all the way around. Do they have to build new factory capacity for this? How does that work? Because of the sheer volumes here, you'd end up needing to supply capacity. If you've toured the Panasonic's Gigafactory in Nevada that supplies Tesla, for example, that's a 35 GWh. It's a huge space, and we're talking about two of those in VW's first license. That factory doesn't produce separators, but that's a pretty core part, and it's a massive industrial footprint, so you should assume that that'll be mainly new equipment. Both partners likely would build out within existing factory shells that they have, but you could assume these would be dedicated lines for this purpose. Talking about existing footprints and like the Gigafactory, one question we get quite often is, does a cell manufacturer have to rip and replace equipment? And how does it work? Switching to you. You could. The cathode, you can think of it as being the same. The cell assembly, in our case, would be stacked. There are some manufacturers like LG who do kind of a combo wind and stack. The cell test would be the same. What's different is we have no anode. So all that equipment that kind of coating processes maybe you could reuse for the cathode. So some parts, very clearly yes. Other parts, it depends, would be the answer. Because the space is growing and in that type of forecast, if the world's going to 5.6 TWh in the next 10 years, most of the factories we need haven't yet been built. So I would think the more normal use case would be new lines. But you could utilize portions of existing equipment. OEMs versus cell or battery manufacturers, OEMs are more of a target for you? Well, but with needing the latter in order to ultimately get them what they want. So, with VW PowerCo, it's clean in that you have kind of one entity controls both. To work with other manufacturers, with other OEMs who aren't as close to a cell manufacturing partner, we would need to work with a cell manufacturing partner to ultimately get our cells into their cars. When you talked about moving from the B sample on smaller equipment to larger equipment, could you, if it's possible, to kind of frame any kind of technology risk to that level? Yeah. So So a perfect question. And we can bring in another animal name, Eagle Line. So that's the name of the line QuantumScape and PowerCo are bringing up, which takes this innovation in ceramics processing that we talked about, that Cobra launches 200 times the speed of kind of the industry standard and upgrades all of the equipment downstream of it just to keep up very, very high levels of automation and kind of the bleeding edge of our process capability. That is real work. You're landing a number of individual tools that are taking in improvements, which we've identified. But it takes time ultimately to realize them, to do tweaks, to kind of get volumes and yields up. And it's not necessarily sexy work in that it's like, oh, behold the world's first solid-state lithium metal cell that is unique. It's more like, OK, I'm here to improve uptime. What are my major sources of uptime loss? Let me parade them out. What's the big one? What's the root cause? Let me eliminate it, rinse and repeat. You've heard Siva talk about systematic, methodical, and iterative. It's about being robust in terms of using data to analyze the problem. Methodical meaning root cause it and it doesn't ever occur again. And then iterative, rinse and repeat. And that's the wheel, the engineering wheel by which you take kind of costs down. We'll do that on the Eagle Line to a certain point. We'll all learn from it. And then we'll empower VW PowerCo off of those learnings to help them design the first scale equipment in one of those factories. And even then, the job won't be done. It will then shift into a support mode. And we'll continue. And then, meanwhile, our teams are in the background of the next generation of cell technology, bring it to the pilot line. And that work will never stop. You can ask questions by raising your hand or session4@baird.com. Just other applications, I know you guys get asked that a lot. You have your hands full. But outside of automotive, where would be the best fit? We do, because the cells, we're targeting improvements on all of the dimensions that you'd care about in energy storage. There's very broad potential places you can take them. Some of the areas outside of automotive where we're getting a lot of inbound pings. One is into this emerging data centers AI kind of infrastructure boom where there are use cases in terms of distributed energy storage on the racks. A second would be anything that flies for the obvious reason. You want the weight and you want the safety savings. And consumer electronics, which really prizes the volume, those would probably be three of the areas where we get some of the most pings. Go ahead, Russ. How is this technology being received by Tesla and BYD? And how far are we if there is a theoretical limit on efficacy? How far are we from that? You were asking about Tesla and BYD in particular. We think of Tesla as being in the sea of potential partners. They would be a very desirable partner for us. We don't comment on any specific discussion. BYD, I would say BYD and CATL are the world leaders in the lithium-ion space. The Chinese have an incredibly dominant market share predominantly on lithium-iron phosphate technology. Dan has flipped up this classic trade-off between power and energy density. What we've done is we've mapped many of the cars in the marketplace, like the Taycans, the Model 3 and the Model S and Y from Tesla, and the Rivian, which kind of create this nice performance curve trading off charge time on the Y axis with energy density on the X. And you see OEMs making very costly decisions to either trade off significant charge time or significant energy density for the other thing. And you can see us push out the envelope. Where BYD and CATL excel is on lithium-iron phosphate, which actually wouldn't be plotted here. What's nice is that the cathode material is very, very, very, very, very inexpensive because it's iron-based. And that's where most of the cost is. So it's a very different category of performance. As a company, our goal is to enter into the performance segment of the market, achieve scale, achieve maturity of those processes. Once we've done those two things, we think our approach is actually lower cost. And at that time, you could start to go into the more volume-based market. And we too could adopt less expensive cathode materials. What's interesting is you'd have the world's least expensive cathode material in terms of the LFP, for example, with the world's least expensive anode, which is nothing. We think that's actually a very compelling product with even better performance. Can we talk about milestones that we should watch for? Yeah. First, just balance sheet to highlight your balance sheet, the milestones to watch for, and then Ducati. I don't know if you were there. Yeah, I was there. It was probably cool. Tearing up. But should we expect more events like that type of thing? OK. Balance sheet, nice, strong ended Q3 2025 with about $1 billion in liquidity. That's been a source of strength for the company. We've promised investors we'll always be strategic on maintaining that. Regarding next steps, Thomas Schmall, Member of the VW Board of Management, said the next steps are two. One, let's get this bike onto the racetrack and show off what those solid-state cells can do. And two is they would like us to get into a larger prismatic cell that is their standard across all of their brands and vehicles for obvious reasons. And then he said our joint goal is commercialization before the end of the decade. So those are the very clear kind of milestones and long-term vision with VW. Other things you should look for is for us to continue to advance these other OEM discussions. Ultimately, our goal is to strike similar type VW collaboration and licensing deals, and then we'd also like to continue to deepen our QS ecosystem relationships and to add others to it. I know that there's a question about revenue recognition and some of the payments. Yeah. So when do we expect first revenue from that? From a stock perspective, I think it's very meaningful. But it's accounting type of thing too. It is. So in Q3 2025, we did the first customer billing, $12.8 million. That is a nice start to our commercialization phase. Because VW is an investor in the company, the accounting for that is perhaps non-intuitive. It's initially accounted for as a liability. When the liability is extinguished, it goes right to equity. We think that accounting treatment is specific to VW. But in the future, as we do other type of collaboration deals and certainly the licensing deals, revenue's on the table per the facts and circumstances of those deals. Thank you, Kevin. Appreciate it. Thank you, Ben.